The new member of the Monetary Policy Committee has warned that Britain faces a “significant” risk of a double dip recession.
Martin Weale, who attended his first base rate meeting in August, says it would be “foolish” to rule out another recession even though the Bank of England is not predicting one.
In an interview with the Times, Weale adds that the risk of another financial crisis “can’t be regarded as trivial”.
Weale voted to keep base rates at historic lows of 0.5% in August and says he is “comfortable” with the Bank’s policy.
He adds: “I am very comfortable with the view that there is slack in the economy, that unemployment is likely to rise further, and the way things are developing I find it hard to see that there are unusually substantial risks to inflation.”
Weale’s warnings come after Andrew Lilico, chief economist at Policy Exchange, claimed interest rates could hit 8% by 2012.
Lilico says inflation could hit 20% and a double dip recession is highly likely.