Households warned over economy
22nd July 2010
Homeowners are being warned that sluggish growth combined with high inflation and unemployment mean the economy will not return to health for "an awfully long time".
The Bank of England's chief economist Spencer Dale warned against any false optimism about second-quarter growth figures while in the grip of this "triple whammy".
In a warning that highlights the need for income protection amid the threat of further redundancies, Mr Dale said households should be ready for a squeeze on living standards.
Homeowners should be looking to cut their household bills and find cheaper home insurance cover.
The challenge ahead becomes apparent when one considers the April-June growth has been achieved against the backdrop of a snowbound first quarter - with the Bank of England's foot on the economic accelerator still floored through record low interest rates and a £200 billion boost to the money supply.
Meanwhile, the GDP figures have been helped by a temporary inventory impact as firms rebuild stockpiles depleted by the recession.
Hopes of a rebalancing toward exports through a weaker pound have failed to emerge so far with a stubbornly high goods trade gap, and recent industry surveys also flag up lower confidence over future prospects as deficit-tackling plans kick in all over the Eurozone - casting a cloud over the UK's biggest trading partner.
Copyright © Press Association 2010
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