Bank's Sentance sees growth in 2009

 

Britain's economy should return to growth in the second half of 2009, although the speed of recovery will depend on the effect of bank lending constraints and the state of the global economy, Bank of England policymaker Andrew Sentance said.

"I expect to see a return to growth in the second half of this year" he wrote in an article for the Sunday Times. "However, there are two big uncertainties over how quickly Britain will recover.

The first is the extent to which constraints on bank lending will hold back spending and business activity. The second big uncertainty is the momentum of recovery across the global economy."

The stock market has risen strongly since March, the falling housing market "appears to be turning" consumer and business confidence have "recovered significantly" and the shock of the banking crisis is fading, he said.

Low interest rates, a competitive exchange rate, government tax and spending measures, the Bank's quantitative easing program and an improved global economy have all played a part in boosting the UK economy, he said.

"Looking ahead, there are grounds for optimism" Sentance added.

However, the strength of the global recovery will depend on whether Asia can become a "true engine of global growth" he added.

If Asian countries can boost consumer demand rather than just meeting demand from the United States and Europe, the recovery will be stronger.