LONDON (Reuters) - David Miles, a member of the Bank of England’s monetary policy committee, told The Independent on Tuesday that productive capacity could reduce with continuing weak demand, but he believed British economic growth would pick up in 2013.
“The danger of remaining in a situation where growth and demand are very anaemic and weak is that you actually reduce the productive capacity of the economy”, the newspaper quoted Miles as saying.
On the wider economic outlook he said: ”I‘m a bit more optimistic that growth is going to pick up ... but I suspect that it will still remain for the next year or so beneath what you might call the average cruising speed for the British economy.
“If that is true, I think we will have growth which will not reduce the amount of spare capacity or slack in the economy, and I think domestically generated inflation pressures remain pretty muted.”
Miles is advocating more quantitative easing, according to the Independent, because he believes there is still room for a weak economy to grow without increasing inflation.
He described the printing of money as a “very powerful tool” and is at the “optimistic end of the spectrum” as to its effectiveness.
Britain’s economy shrank by 0.3 percent in the fourth quarter of 2012 prompting fears of a triple dip recession.
Reporting By Costas Pitas; Editing by Eric Meijer and Christopher Wilson