• Bank of England predicts sharp fall in inflation in 2012

Commenting on the Quarterly Inflation Report published today by the Bank of England, David Kern, Chief economist at the British Chambers of Commerce (BCC), said:

“The latest Inflation Report highlights the difficult economic circumstances facing the British economy over the next two years. We agree with the Bank’s prediction that given the serious problems in the eurozone and the impact of the domestic austerity plan, UK growth will stay weak over the next few quarters, though a recession is unlikely.

“However, the improvement in growth envisaged in the Inflation Report from the second half of 2012 appears too strong. Previous reports have constantly overestimated the economy’s growth outlook, and we are concerned this may be happening again. While a modest improvement is probable from mid-2012 onwards, this will be relatively weak. We must accept the fact that the economy is facing a long, hard slog over the next few years.

“We agree with the Bank’s judgment that inflation will fall sharply in 2012, which will allow the MPC to keep interest rates low and maintain an aggressive QE programme. But we would urge the committee to reassess its reluctance to purchase private sector assets, and take further measures to reinforce the credit easing programme that the Chancellor is set to announce in his Autumn Statement.”


Notes to editors:

The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce, serving over 100,000 businesses across the UK, which employ over five million people.

Media contacts:

Liz Larvin
Tel: 020 7654 5813 / 07825746812
Email: l.larvin@britishchambers.org.uk

Lisa Morrison
Tel: 020 7654 5812 / 07717682221
Email: l.morrison@britishchambers.org.uk