"They are less willing to expose themselves to banks. They prefer instead to hoard levels of cash and insure themselves. That is one of the factors that is holding back our recovery."
- Spencer Dale, Bank of England's chief economist
Britain's economy is performing well, at least much better than the neighboring Eurozone and other developed economies. Nevertheless, there are issues that are limiting the expansion. Central bank's chief economist Spencer Dale said that a lack of confidence in banking sector amid nation's businesses is holding back the recovery. Despite all measures done by the government to make credits more accessible and terms more attractive, companies are still feeling unable to rely on banks, after the banking crisis back in 2008-09, hence, they are not showing willingness to borrow.
At the same time, Dale pointed out the economy had turned a corner and is now recovering from the financial crisis. And while investors are betting the Bank of England will start increasing interest rates sooner than expected, Dale pledged the policy would remain accommodative for as long as it is needed to assure the economy is back to full strength. Earlier, Mark Carney said he would not discuss a possibility of a rate rise until jobless rate fell to 7%. However, taking into account latest data, the indicator may hit the threshold level even sooner. In this case, Carney mentioned the 7% level is not considered as an automatic trigger for a rate hike.
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