King Says ‘headwinds’ Are Gaining Strength
August 10, 2011 by UPI - United Press International, Inc.
LONDON, Aug. 10 (UPI) — Bank of England Gov. Mervyn King said Wednesday public and private debt is a mounting barrier to economic growth, which has already turned sluggish.
In remarks accompanying the August inflation report, King said, “There are a number of headwinds to world and domestic growth over the forecast period, not least the private and public debt overhang.
“And these headwinds are becoming stronger by the day,” King said.
The bank predicted an economic trajectory consistent with previous reports, but at a slightly slower pace. In its way is slow growth, which in Britain fell to less than 1 percent over the past year, which reflects “a substantial squeeze on households’ real incomes,” King said.
Overall, “the mood in markets has taken a sharp turn for the worse,” King said. “Much of this reflects rising concern about the sustainability of indebtedness in the euro area and the outlook for growth and fiscal policy in the United States.”
Policymakers at the central bank predict fourth-quarter gross domestic product growth will “recover modestly … albeit at an uncertain pace, supported by expansionary monetary policy.”
The bank’s overnight lending rate is 0.5 percent. In its August report, the bank said the consumer price index remains “well above the 2 percent target.” Meanwhile, “output grew sluggishly.”
The annual rate was 4.2 percent in June.