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Europe faces lost decade - Carney
Mark Carney, the incoming Bank of England Governor, has warned that Europe could face a decade of stagnation unless it takes the kind of bold measures seen in Japan.
The IMF is expected to be critical of the Chancellor Photo: Reuters
By Philip Aldrick, Economics Editor
6:43PM BST 21 May 2013
2 Comments
In words that will underline his status as a monetary activist and fuel speculation that he will try to relaunch quantitative easing (QE) when he arrives in the UK, Mr Carney applauded Japan’s “bold policy experiment” to boost dramatically its own QE programme.
He said: “Europe can draw lessons from Japan on the dangers of half measures... Europe remains in recession. Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens.”
Mr Carney was making his last speech as Governor of the Bank of Canada before coming to the UK, where the Chancellor and the markets are gambling on him providing more stimulus to boost growth. Of the G7 nations, which includes Britain, he argued that only “Canada does not need to repair”.
His country’s success, he said, was down to “responsible fiscal policy, sound monetary policy, [and] a resilient financial system”.
His comments came ahead of what is likely to be a difficult day for George Osborne. The International Monetary Fund is expected to criticise the Chancellor’s strategy today when it publishes its annual update on the UK economy. The “Article IV” report is expected to recommend he change his plans and borrow more to invest in infrastructure or cut taxes.
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It follows calls by several senior officials last month for the UK to slow down on austerity to boost growth and get the public finances under control. It will be the culmination of a row that began in Washington last month, when IMF chief economist Olivier Blanchard said the Chancellor was “playing with fire” by persisting with austerity.
David Lipton, the first deputy managing director who will be presenting the report today, also intervened, saying: “Our view is the pace of consolidation ought to be reconsidered.” Labour will no doubt claim today's proposals are an endorsement of its strategy.
Last week, the Chancellor pre-empted the IMF’s attack by emphatically pledging not to change course, saying: “We will stick with our approach.”
Since then, the economic data has strengthened the Chancellor’s hand. The UK has avoided a triple dip recession, and the recovery appears to be gathering steam. Stock markets are also soaring. The FTSE 100 broke through 6,800 points to hit another 13-year high yesterday. The blue chip index rose 48.24 points to close at 6,803.87.
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Mark Carney, the incoming Bank of England Governor, has warned that Europe could face a decade of stagnation unless it takes the kind of bold measures seen in Japan.
The IMF is expected to be critical of the Chancellor Photo: Reuters By Philip Aldrick, Economics Editor
6:43PM BST 21 May 2013
2 Comments In words that will underline his status as a monetary activist and fuel speculation that he will try to relaunch quantitative easing (QE) when he arrives in the UK, Mr Carney applauded Japan’s “bold policy experiment” to boost dramatically its own QE programme.
He said: “Europe can draw lessons from Japan on the dangers of half measures... Europe remains in recession. Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens.”
Mr Carney was making his last speech as Governor of the Bank of Canada before coming to the UK, where the Chancellor and the markets are gambling on him providing more stimulus to boost growth. Of the G7 nations, which includes Britain, he argued that only “Canada does not need to repair”.
His country’s success, he said, was down to “responsible fiscal policy, sound monetary policy, [and] a resilient financial system”.
His comments came ahead of what is likely to be a difficult day for George Osborne. The International Monetary Fund is expected to criticise the Chancellor’s strategy today when it publishes its annual update on the UK economy. The “Article IV” report is expected to recommend he change his plans and borrow more to invest in infrastructure or cut taxes.
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- Bank raises growth forecast in rare boost for economy
15 May 2013 - IMF cuts UK growth and says slow austerity
16 Apr 2013 - Row between Chancellor and IMF escalates
20 Apr 2013
It follows calls by several senior officials last month for the UK to slow down on austerity to boost growth and get the public finances under control. It will be the culmination of a row that began in Washington last month, when IMF chief economist Olivier Blanchard said the Chancellor was “playing with fire” by persisting with austerity.
David Lipton, the first deputy managing director who will be presenting the report today, also intervened, saying: “Our view is the pace of consolidation ought to be reconsidered.” Labour will no doubt claim today's proposals are an endorsement of its strategy.
Last week, the Chancellor pre-empted the IMF’s attack by emphatically pledging not to change course, saying: “We will stick with our approach.”
Since then, the economic data has strengthened the Chancellor’s hand. The UK has avoided a triple dip recession, and the recovery appears to be gathering steam. Stock markets are also soaring. The FTSE 100 broke through 6,800 points to hit another 13-year high yesterday. The blue chip index rose 48.24 points to close at 6,803.87.
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Economics
In Finance »
10 well paid jobs for 2030
Top 10 coolest offices in the UK
Related Partners
In Economics
Where UK economic growth is coming from
'Cautious George Osborne has damaged the economy'
Debt crisis: live
Sign up to our weekly Money newsletter
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sopwiththecamel
2 minutes ago
These central bankers are legends in there own minds. A two trick pony, move interest rates and print money.
There is no answer to decline and Mr Carney is not the cavalry, that he seems to think he is should be ringing alarm bells.
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fine
20 minutes ago
Even if it means the end of the UK, the dollar should be saved at all costs. Good idea getting a foreigner in to destroy the UK.
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Lindumeconomics
34 minutes ago
Looks like Gauliste characteristics to me...