Live updates

Advertisement

Mark Carney: Britain 'more than halfway' to recovery

Britain is "more than halfway" along the road to recovery, according to the governor of the Bank of England.

Speaking to the Sunday Times (£), Mark Carney said the economy had moved decisively from recovery to a full-blown expansion.

Governor of the Bank of England Mark Carney Credit: PA

Mr Carney said: "Wherever the finish line was in the depths of the crisis, we are much more than halfway towards that finish line now", but warned that challenges still lie ahead.

The Bank of England expects the economy to grow by 3.5% this year, easily the fastest pace predicted for any advanced country. Unemployment is also expected to fall below 6% by the end of 2014, with 800,000 jobs created over the past year.

Interest rates stay at 0.5% despite speculation over rise

Interest rates have been at 0.5% despite speculation that some rate-setters on the Bank's nine-member monetary policy committee (MPC) might have voted for a hike. But an overall vote in favour would have surprised markets, with analysts focusing instead on the prospect of a rise towards the end of this year or early in the next.

The Bank of England. Credit: Anthony Devlin/PA Wire/Press Association Images

In the second three months of the year gross domestic product (GDP) figures last month showed the UK had finally emerged from its worst downturn since the Second World War as output surpassed its pre-recession peak in early 2008.

Since then, survey data indicating strong growth in the dominant services sector has added to pressure for a rate rise - though a weaker performance for Britain's beleaguered manufacturers has led to calls for caution.

Interest rates may 'return to pre-crisis' levels in a decade

UK borrowers should expect interest rates to return to their pre-recession levels of around 5 percent within a decade, according to the outgoing Bank of England deputy governor for monetary policy.

Sir Charlie Bean who leaves his job tomorrow. Credit: PA

Sir Charlie Bean who leaves his job tomorrow, said market expectations that the first increase in interest rates would come at the turn of the year were "reasonable".

He told Sky News: "The market has rates going up to 2.5% over next three years. That seems like a broadly sensible judgment."

Sir Charlie admitted that in the run-up to the crash, economists were "not sufficiently cognisant of the risks building up in the financial system" but insisted the economy is far more resilient than when he arrived at the central bank in 2000.

Advertisement

Borrowing costs 'may return to pre-recession levels'

Interest rates are likely to hit 5% within a decade, according to the outgoing Bank of England deputy governor for monetary policy. Sir Charlie Bean said it would be "reasonable" to expect borrowing costs to return to pre-recession levels in the long term - between five to 10 years.

Outgoing Bank of England deputy governor for monetary policy Sir Charlie Bean Credit: PA

Homeowners have enjoyed a historically low 0.5% base rate for five years but the level has caused misery for savers. Sir Charlie told Sky News: "It might be reasonable to think that in that long term you would go back to 5% but it's probably quite a long way down the road."

Earlier this week, Bank of England governor Mark Carney urged people to focus on the "big picture" rather than obsessing about when interest rates will start to rise.

It followed accusations that he had been behaving like an "unreliable boyfriend" by hinting at a rise this year, before appearing to back-pedal.

Economist: House prices likely to continue rising

House prices are likely to continue rising "solidly" over the next few months, according to a leading economist.

House prices rose by 8.0% in the 12 months to March to reach £252,000 on average, ONS figures show. Credit: PA

Dr Howard Archer, chief UK and European economist for IHS Global Insight, said: "Housing market activity is likely to be supported by substantially improved consumer confidence, markedly rising employment, improving earnings growth and extended low mortgage interest rates."

The rise is also currently being fuelled by the Help to Buy initiatives and a short supply of homes in some areas, he added.

Load more updates