LONDON (Reuters) - The head of the country’s leading supermarket Tesco said in a newspaper interview on Saturday he expected the economy to improve in coming months once a series of negative pressures had passed.
The Bank of England has kept interest rates at a record low for two years while the economy remains weak and analysts are watching for any signs that might prompt policymakers to raise borrowing costs.
“Things should pick up some time this year -- when the commodities price (rises) lap themselves, when the VAT (sales tax) rise laps itself, the fuel price rise laps itself and we get through the public sector impact on jobs. The global economy actually is in recovery,” Tesco Chief Executive Phil Clarke told the Daily Telegraph.
“Lots of things can destabilise that. Interest rate rises might be a bit unhelpful. But I am more optimistic than many. There is still investment coming into this country,” Clarke added.
Tesco, the world’s No.3 retailer with over 5,000 stores in 14 countries, said earlier this week it expected trading to remain challenging in Britain, but that conditions were improving in most of its other markets.
Preliminary data from the Office for National Statistics on April 27 will show how strongly Britain’s economy rebounded in the first three months of this year from its unexpected 0.5 percent decline at the end of 2010.
The Bank has kept rates at 0.5 percent since March 2009, in contrast to the European Central Bank, which raised borrowing costs this month for the first time in almost two years.
The coalition government is cutting public sector jobs and has raised the VAT sales tax to 20 percent from 17.5 percent to help tackle a record budget deficit.
Reporting by Tim Castle; Editing by Toby Chopra