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Friday, 14 August 2009

Bank thinks economy has not yet bottomed out. £50 billion more needed!

Those green shoots are springing up in the eyes of estate agents and the property world. Prices are rising they say, the recovery is well under way.

In the real world, the Bank of England seems to thinks otherwise. Interest rates have been kept to 0.5% and a further £50bn needs to be pumped into the economy through printing money, sorry "quantitative easing".

In a statement, they said that the UK recession "appears to have been deeper than previously thought" but the pace of contraction has moderated and business surveys suggest that the trough in output is close at hand."

So the bank seems to think the recession is nearly near the bottom. But like the bank, I think real growth is some way off yet.


BUT if you are an economist for Goldman Sachs you have already decided the recession has ended and growth under way !

See the comments below from the Evening Standard last night http://www.thisislondon.co.uk/standard/article-23731871-details/'Britain's+worst+recession+in+living+memory+is+over'/article.do


Jim O'Neil chief economist at Goldman Sachs, said the country had pulled out of the financial crisis and the economy was already growing again.

As he spoke, the FTSE 100 hit a year-high as optimism spread through dealing rooms. By mid-afternoon it had fallen back slightly but was still up 30 points at 4,746.

Surely he doe not have a vested interest in driving markets up does he? Remember Goldman Sachs benefits from movements in markets!

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