SOUTH SHIELDS (MNI) – Bank of England Chief Economist Spencer Dale
said the fall in sterling had boosted UK exports and manufacturing
output, but it was uncertain whether this could continue as global
demand growth slows.
In a question and answer session following his speech here Dale
highlighted the progress manufacturing has made so far but was downbeat
about the economic outlook.
“Exports of goods have increased, seen double-digit growth and
we’ve seen that reflected in terms of strong growth in the manufacturing
sector,” he said.
“The level of manufacturing output still has not got back to the
level it was at prior to the crisis, but we’ve seen strong growth in
manufacturing and I think that strong growth in exports has been aided
by two things: we’ve had a pretty strong recovery in world demand and a
low level of sterling,” he added.
“The challenge and uncertainty now is whether exports and
manufacturing continue to grow as we see this slowing in global demand,”
Dale said.
Dale did not vote for an extension of QE at the September MPC
meeeting, but he firmly rejected the idea QE amounted to monetizing the
debt.
“We are not doing anything that is like Zimbabwe or Germany in the
past, buying government debt but we will hold that debt and we will sell
it off again,” he said.
He said the the automatic stabilisers would kick-in if the economy
slowed further and they would support demand.
“If the economy does slow, we’ll see an automatic loosening of
fiscal policy, spending will increase, particularly as spending on
benefits increases. These are called the ‘automatic stabilisers’ and …
importantly in the UK the economic stabilisers are really quite large,”
he said.
Dale said what was happening at present, with consumer demand not
growing, was “very unusual in a recovery”.
–London newsroom: 4420 7862 7492; email: wwilkes@marketnews.com
[TOPICS: M$B$$$,M$$BE$]