UK recovery deemed ‘unsustainable’

<p>Mark Carney has said that interest rates will remain on hold as the UK’s remains ‘unsustainable’.</p>

The governor of the Bank of England Mark Carney has described the the UK's recovery as "neither balanced nor sustainable".

Mr Carney explained that the ultra-low interest rates will remain until the general election in 2015 due to the slow process in the UK's recovery efforts. It was reported yesterday (February 12th) that new forward guidance would be likely to stay at the 0.5 per cent rate, the lowest figure the country has seen in nearly five years.

The governor of the Bank of England explained that the decision was taken as the country was not yet ready to cope with an end of emergency measures which were put in place following the start of the recession in 2008. However, despite interest rates remaining at significantly low figures, Mr Carney reassured both businesses and homeowners that when they are raised it will be a slow and gradual process.

In a statement, Mr Carney said: "A few quarters of above-trend growth driven by household spending are a good start but they aren't sufficient for sustained momentum. For a sustained and balanced recovery, the degree of stimulus will need to remain exceptional for some time."

The Bank has been forced to abandon its reliance on unemployment as guide to interest-rate policy following a significant drop in the amount of people out of work following summer 2013. It will now use Threadneedle Street to assess 20 indicators of how the economy is performing and then determine what can be done to drag the UK back to recovery.

Interest rates have remained low in the UK as a way of building confidence that the country is slowly rebuilding back to its pre-recession phase. However, the public is concerned about the impact the move could make on their day-to-day lives in the coming years.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.