Chamber news: bank cuts growth forecast

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce

Today’s Bank of England Inflation Report has further downgraded expectations of growth for the UK economy from around 0.8% to almost zero in 2012.

Responding to the downgrade, Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, said: “There seems to be an obsession with focusing on flawed economic models, even though these models could not foresee the crisis that is still very much with us.

"The Bank must base its judgement on what is happening to businesses in the real economy, as we report in our Quarterly Economic Survey.

“We warned twelve months ago that more urgent action to stimulate domestic demand through infrastructure investment was needed, to support growth and the region’s long term competitive position in a global economy. The Bank was complacent and ignored the warning signs.

“As a result we are now in a double dip recession, but that should not stop moves to support growth. The Bank should consider using some of its asset purchase monies to support infrastructure investment and establish a bond market for small and medium sized firms, though the focus first must be on demand. The Government should facilitate the delivery of projects without any delay and if the Bank is not prepared to support stated Government policy, it must use the reverse powers granted under the Bank of England Act.”