Sir Eddie Steadies Fears of Worldwide Recession; Outlook for British Economy Is Still Rosy, Says Bank of England Chief
BRITAIN need have no fear of a recession, Sir Eddie George said last night.
The Bank of England governor joined bankers from major countries to present an upbeat picture of the world economy.
They said they expected a 'soft landing' rather than a sharp slowdown for the U.S. and other world economies. 'Nobody
around the table was projecting a recession either in the U.S. or the global economy,' Sir Eddie said after chairing a meeting of central bankers at the Bank for International Settlements in Basel, Switzerland.
Slower growth had brought output to more sustainable levels after the accelerated pace of the first half of last year, he said.
'It may be a bit turbulent but if you look at the landing strip extending out beyond the first and second quarters, then the best bet . . . is that it would be a soft landing.' Sir Eddie said U.S. Federal Reserve officials had emphasised that underlying improvements in productivity would continue but the slowdown was likely to return investor expectations to more realistic levels.
'The situation in Europe will
be nothing like as bumpy as in the U.S.,' he said. He stressed, however, that the American slowdown was in no way a disaster. Predictions of a 'meltdown' there were exaggerated.
Most central bankers at the meeting, including Federal Reserve vice-chairman Roger Ferguson, believed the U.S. economy would grow by 2 to 3 per cent in 2001, roughly half the growth rate seen in the first half of 2000, Sir Eddie said.
The U.S. central bank surprised markets last week by cutting key interest rates, and said it was ready to drop them further to stop the economy from slowing too much. …