Former deputy governor of Bank of England, Sir John Geive, including notable past rate-setters, Charles Goodhart and Dame Deanne Julius have made stunning statements claiming that the economy of the United Kingdom had finally reached or is on the verge to touch ‘escape velocity’. The top economists of the country had foresighted better days in the near future. They had even argued resurrection of UK’s economy with a strong base in the coming years.
The comments from these imminent experts of the country followed exotic growth of the country’s economy recorded during the second quarter of the financial year. However, it is a fact that none still expect effective rise in the rate of interest within the coming period. Experts are also of the opinion that the new Governor of the Bank, Mark Carney should be committed to extend the period involving lower interest rates till 2015.
Dame Julius also threw an enlightened insight to this growing trend while addressing the Monetary Policy Forum of Fathom Consulting. The noted exponent said that the current growth rate of the country is tempting towards achieving 2 per cent to 2.5 per cent, even after going through a phase of recession throughout eurozone. The growth is also predicted even after an initial projection of slow global growth by IMF. This definitely points towards achieving ‘escape velocity’.
The exponent also explained that the growth, which the country is experiencing, is highly sustainable. She even dismissed considerable fears related to extreme household debts, including a formal threat posed by Government initiative of subsidized housing projects.
While commenting on the issue related to escape velocity, Mr. Goodhart retaliated that the country is almost at the threshold of achieving escape velocity, which could serve to be the turning point that was long wished for the revival of economic boom. Noted economists of the United Kingdom are also expecting an expansion of current GDP by over 1 per cent during the end of the present year. They are also hoping to see an increase up to 2 per cent of GDP in the coming financial year.
According to Sir John, the country is on a fifty-fifty platform related to attainment of escape velocity. However, he even added that the role of consumers should not be discarded as a driving force of economic boost since deleveraging of households have exceeded to a substantial portion of total population.
On the other hand, Fathom offered a more pessimistic view to the entire scenario, which UK is observing at the moment. He even warns that a country’s growth based on the spending capacity of population is not a viable platform to achieve sustainable development of economy. He even addressed that the present trend and process adopted to boost the economy on the basis of spending capacity of an already debt-fuelled consumer would surely show irreparable signs in the near future.
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