Economy shows optimistic signs - Bank of England deputy
- 28 October 2012
- From the section Business
There is "reason for some optimism" for the UK economy, the Bank of England's deputy governor Charlie Bean has said.
He cautioned against "getting over-excited" after new GDP data showed the recession was over - pointing out the Olympics had given a one-off boost.
But Mr Bean said there were "signs of progress" from the eurozone and banking crises and inflation should be lower.
Labour said families were still being squeezed but ministers reject claims austerity policies were hitting growth.
Last week's official gross domestic product figures, which measure the value of everything produced in the country, showed the economy grew by 1.0% in the three months from July to September.
It had been in recession for the previous nine months and has still not recovered the levels of output seen before the financial crisis in 2008.
'The right path'
Speaking on the Murnaghan show on Sky News, Mr Bean said: "The big picture here is of an economy that has been bumping along the bottom for two years.
"We do think there is reason for some optimism going forward. Some of the headwinds we have been struggling against in the past couple of years will be abating somewhat.
"Most particularly, we have seen a big squeeze on households' real spending power... Going forward, that squeeze should not be so intense."
Labour's shadow business secretary Chuka Umunna told the programme families and businesses were still struggling.
Official GDP figures showed the UK economy had contracted by 6.4% between the start of 2008 and the middle of 2009, and had since recovered about half of that lost output. The level of output in the third quarter of 2012 was almost exactly the same as it had been in the third quarter of 2011.
"It is good news that, with the help of the Olympics and after the longest double-dip recession since the Second World War, we saw a positive number last week," Mr Umunna said.
"But I think the statistics are one thing, how people feel is another... All we saw last week was essentially things going back to the position we were in last year."
Interviewed on the BBC's Sunday Politics, Chief Secretary to the Treasury Danny Alexander accepted the impact of the eurozone crisis and commodity price rises meant "growth has been much slower than we would have liked over the last two to three years".
But he added: "We knew when we came into office that they were going to be difficult but I don't think that means that the path we chose was wrong...
"If we hadn't gone for the austerity programme that we did - the deficit reduction, the spending reductions and so on - then our economy would have been in a much worse position."