It will be interesting to see if expansionary monetary policy a l'outrance can keep Britain afloat, or if it is simply pushing on a string. The export channel should help. But I certainly would not do this were I in Mervyn King's shoes.
Chris Giles and George Parker:
King defends UK economic policy: The Bank of England has robustly defended the UK government’s economic strategy, urging it to stick to tough public spending cuts in spite of shock figures showing the inflation-prone economy shrunk at the end of last year. Mervyn King, the bank governor, said the economy’s 0.5 per cent contraction in the fourth quarter proved the recovery would be “choppy”. But he used the economic weakness to defend the central bank’s ultra-loose monetary policy in the face of high inflation....
George Osborne, the chancellor, and the governor are united in their belief that Britain’s structural deficit should be eliminated within four years, but they now face a tough adversary in the abrasive Ed Balls, the new shadow chancellor, who argues that the priority should be growth. The economic debate at Westminster has been transformed in a matter of days....
“My advice to George Osborne is don’t blame the weather: change your mind, get a Plan B, get a policy for jobs and growth and do it quickly,” Mr Balls said, claiming that the economy was too fragile to withstand cuts.
But the chancellor insisted he would not be “blown off course”, pointing out that the Office for National Statistics had said that December snow had lopped 0.5 per cent off growth in its preliminary figures, which would otherwise have been flat...
