Economic Recovery in the UK beggining the end of this year?

According to a recent article in the Financial Times the UK economy should begin to recover by the end of this year. The huge monetary and fiscal provisions, combined with sharp falls in commodity prices, will help boost household and business spending, a senior Bank of England official predicted.

Spencer Dale, chief economist at the Bank and a member of its rate-setting monetary policy committee, made the remarks at a meeting of the Association of British Insurers, a group whose members have been hit by the sharp fall in stock markets and the crunch in credit markets.

“As we go through 2009, I believe it is most likely that the pace at which output is contracting will ease and that we will see some signs of recovery by around the turn of this year,” Mr Dale told the group.

He went on to say that the causes of the current recession were different from previous recessions and that its actual path was not known. “There is huge uncertainty about the precise form and timing of the recovery and so this central path should be treated with a healthy degree of scepticism.”

Mr Dale said the Bank would keep in place its unconventional exercise of monetary policy (known as quantitative easing) until it became apparent that it had succeeded in bringing inflation back to its annual 2 per cent medium-term target.