Economy seems to have turned, says MPC member

2 December 2009 | By Natalie Thomas

Dale, who also acts as the Bank’s executive director and chief economist, believes the economic signs for next year look promising.

Speaking this morning at the Essex Institute of Directors in Billericay Dale told delegates that even though GDP is estimated to have contracted in Q3 by 0.4%, business surveys and other evidence suggest that the economy has begun to stabilise.

But he cautions there are still “economic headwinds” which threaten to slow down recovery.

He says that credit conditions are likely to remain tight as banks repair their balance sheets, and a more conservative public attitude to finance will weigh on their spending habits.

Dale believes that growth will be up on the recent months but says that the recovery in the level of economic activity is likely to be “relatively slow.”

He says: “At this time a year ago output was in freefall, the banking system was in near meltdown, business and consumer confidence had evaporated, and there was a very real risk of a serious economic depression.”

He adds: “Monetary policy has played a critical role in the stabilisation of the economy.

“We have turned a corner on the road to recovery.

“But there is a long way to go with many challenges ahead as the economy moves into better balance.

“In facing these challenges, the MPC will do whatever it takes to ensure that inflation remains on track to hit the target.”

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