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Is the Bank of England's economic model at fault?

Willem Buiter, a founding member of the Bank of England MPC committee, has this evening stepped forward to suggest that the Bank of England's economic model, currently in use, is a complete waste of time. In a move which will shock many in the banking industry he has called for interest rates to be lowered to 0% as soon as possible and suggests that quantitative easing should be introduced immediately.

Current and former members of the MPC committee have historically been very private in their views and it is only over the last few weeks that we have seen some of them step from the shadows and comment officially on the economy. Whether we are seeing some kind of fallout from past Bank of England committee disagreements remains to be seen, but the teamwork for which the Bank of England has been renowned over the years appears to be in danger.

The more prominent economists suggesting that the UK economy is in serious danger the greater the concern of consumers which will in due course affect the level of confidence in the economy. This is a vital element of any economic recovery and one which the UK government has been trying to nurture over the last few weeks. The comments by this former MPC committee member have called into question various Bank of England comments and Treasury forecasts and left the authorities open to severe criticism.

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