British economic recovery ‘broadening’ but has ‘some way to go’ before it is balanced and sustainable, according to Bank of England

By CITY & FINANCE REPORTER

Updated: 19:40 EST, 19 March 2014

The British economic recovery is ‘broadening’ but has ‘some way to go’ before it is balanced and sustainable, according to the Bank of England.

Minutes of this month’s meeting of the monetary policy committee show the central bank believes the rebound last year was not as dependent on household spending as suspected.

It also shows that the officials charged with setting interest rates expect unemployment to fall below 7 per cent in the coming months – the threshold which the Bank previously suggested would trigger interest rates to increase from their record low of 0.5 per cent. However, the central banker has since ruled out an immediate hike.

On the right track: The Bank, led by Governor Mark Carney, has sought to dampen speculation that the economic recovery will lead to sharp rises in interest rates

‘The recovery over the past year might not have been as reliant on the household sector as it had previously appeared,’ the minutes say. ‘In particular, there were initial signs that the anticipated broadening from household to business spending might have already begun.

‘Even so, there remained some way to  go to ensure that the recovery was both balanced and sustainable.’

The Bank, led by Governor Mark Carney, has sought to dampen speculation that  the economic recovery will lead to sharp rises in interest rates, which were held again their record 0.5 per cent low this month.

Speaking in the City on Tuesday night, Carney said: ‘A low interest rate environment will likely be with us for some time.’

He added: ‘The MPC’s new guidance  that any adjustments in rates, when they come, will be limited and gradual, helps provide confidence to households and businesses that the MPC won’t take risks with the recovery.’