Bank of England criticised over view of economy

Fri, 06 Jun 2008

The Bank of England has taken a "fairly sanguine view" of the risks of an economic downturn, according to one expert.

Investors may be interested to know that Jonathan Loynes, chief UK economist at Capital Economics, told Channel 4 News that the housing market has historically played a significant role in determining the state of the country's economy .

"If you look back through history every time you have seen a major slowdown in the housing market in the country we have seen a sharp downturn in the overall economy as well," he claimed.

The Bank has taken a "sanguine view" of this trend, Mr Loynes argued, but stated that he anticipated the housing market would have a significant negative impact upon the wider economy.

"I suspect that the housing market will hit the economy very hard," he told the programme.

Yesterday, the Bank's monetary policy committee chose to maintain the current base rate of interest at five per cent.

It last voted to reduce the base rate by 0.25 per cent in April.
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