Andrew Bailey Bank boss concerned over UK growth outlook 27/11/23

Andrew Bailey concerned over growth

The Bank of England's big boss, Andrew Bailey, is worried about the UK's economic growth. He's saying it's not looking too good, and he's not planning to lower interest rates anytime soon.

Why? Well, the government's economic predictors recently said the UK's growth outlook is not great, partly because of high inflation and interest rates. Inflation is the rate at which prices for things we buy go up. It's come down a bit lately but is still way higher than the Bank of England's target.

Mr. Bailey, in an interview with Chronicle Live, said that getting inflation down to the target of 2% is going to be tough. He's concerned about the less wealthy folks but insists that cutting interest rates isn't the solution.

Currently, interest rates are at 5.25%, the highest in 15 years. This has made mortgages more expensive but also increased savings rates.

Despite some recent relief in the inflation rate, Bailey keeps warning that interest rates won't be going down soon. He's cautious about the impact on people with lower incomes.

The Bank started raising rates in December 2021 to control inflation. However, it's a delicate balance. If rates go up too fast, people and businesses might spend and invest less, which can slow down the economy.

While the UK isn't in a recession, there are worries about sluggish economic growth. The Chancellor recently announced some tax cuts to boost growth, but the overall tax burden is still headed for a record high.

Bailey is troubled by the slowing productivity of the economy. The independent Office for Budget Responsibility expects growth to be 0.6% this year, but the outlook for the next couple of years isn't as good as they thought.

A report from the House of Lords Economic Affairs Committee suggests that the Bank's independence has been questioned due to rising inflation and a loss of public confidence. It suggests reforms to improve the Bank's performance and make it more accountable to Parliament.

In a nutshell, Bailey is concerned about the economy, and despite some tough measures, he's not ready to lower interest rates just yet. The government is trying to boost growth, but there are challenges ahead.

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