UK economy could take two years to recover
Despite only yesterday suggesting that the UK economy was well on the way to recovery, the Bank of England has backtracked slightly with a suggestion that pre-credit crunch levels will not be reached until 2011 at the earliest. Citing a "long and hard" recovery the Bank of England appears to be giving mixed signals to the markets which will not go down well amongst investors and analysts. So what next for the UK economy?
If we are to believe the most recent comments from the Bank of England, and indeed the UK government, the next two years may be a period of consolidation for the UK economy during which time trading conditions will remain difficult, especially if the UK banking sector refuses to increase liquidity. Whether we might see a manufactured short-term recovery between now and the next election remains to be seen but there is always a chance that the UK government will look to paint a rosy picture for voters.
It is the mixed signals from Bank of England and the UK government which is confusing and annoying analysts. The current situation is made more difficult by the fact that many analysts do not want to "go out on a limb" and call the end of the recession only to have economic figures restated in the short term.
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