RTTNews - Thursday, the new Bank of England policymaker David Miles said it is unlikely that there will be a rapid return to growth in the UK economy.
Data released earlier in the week showed that the British economy experienced the largest contraction since 1958 in the first quarter and the GDP decline was severe than initially estimated due to sharp declines witnessed in construction and services. The economy shrank 2.4% in the first quarter from the fourth quarter of 2008, which was a steeper decline than the previous estimate of a 1.9% drop.
In his appointment hearing before the Treasury Committee, Miles said the UK banking system remains on life support and this threatens credit availability.
Elsewhere on Thursday, a survey from the central bank showed that lenders expect a further rise in the availability in the third quarter.
Miles reportedly warned about any significant fluctuations in the sterling exchange rate.
In a written testimony, the policymaker, who is a mortgage market expert, said, Expectations are crucial in the housing market and they look a bit better now than a few months ago.
My hunch - and I put it no stronger than that - is that we have seen most of the overall aggregate house price falls. But no-one knows.
He told lawmakers that he was ridiculed by many in the mortgage industry in 2005 and 2006 for saying that prices were over-valued by 20%-25%.
Regarding monetary policy, Miles is of the view that abandoning the inflation target is not a sensible response to the global financial crisis. He warned that such a move would be very risky.
The former Morgan Stanley's UK chief economist said unemployment in the UK is very likely to rise further and for some months.
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