In his quarterly overview of the British economy, Mark Carney said output here is growing at its fastest rate since 2007, while jobs are growing more than since records began.
He believes that the recovery shows a revival in confidence and an ease on credit. That, he said, meant households were spending more and saving less and there’s been a boost to the housing market.
But business investment is still subdued, although indications are that may change this year.
The Bank of England has revised its position on interest rates. Last year, it said it wouldn’t revise interest rates until unemployment fell to seven percent.
But growth in productivity is “disappointing,” Carney said, while there is more slack in the labour market. Part time work continues to increase while half of the recent increase in jobs is because people are self employed.
But Carney warned the recovery “is neither balanced nor sustainable….If and when the time comes that the economy can sustain highter interest rates, bank rate is expected to rise only gradually”.
The Bank of England won’t raise interest rates until spare capacity has been absorbed further. He said the rate will stay at low levels for quite some time.