Britain ‘already out of recession’ says Bank chief

Andrew Bailey
Andrew Bailey: inflation is falling

Britain may have already moved out of recession and is showing signs of an upturn, according to the governor of the Bank of England.

Andrew Bailey also told a committee of MPs that the bank may cut interest rates before inflation sinks to its 2% target.

The governor said the bank could make an early decision as long as price pressures continue to ease.

The Bank has forecast that inflation will fall to 2% in the spring from its current level of 4% after high energy prices slip out of the data.

Financial markets have priced in up to four interest rate cuts this year as inflation comes down and the cost of living squeeze eases.

Figures from the Office for National Statistics last week showed that the economy shrank by 0.3% in the final three months of last year, meaning that it had slipped into a recession after contracting by 0.1% in the previous three months.

Mr Bailey told told MPs on the Commons Treasury select committee that there was resilience in the labour market and household incomes were improving.

“The economy appears to be at full employment,” he said, noting that incomes were rising more quickly than inflation. This should help encourage consumer spending and economic growth.”

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