A realist on the MPC

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The First Post Daily reports:

One of Britain's most respected economists warned yesterday that it would be foolish to rule out the possibility of a double-dip recesssion. Dr Martin Weale, the newest member of the Bank of England's Monetary Policy Committee (MPC), also fears that the Bank's forecast for growth of about 2.8 per cent in 2011 and 3.2 per cent in 2012 is too optimistic.

Asked if there was a danger of a second economic downturn, Weale said that it was a "real risk". He added: "People would be foolish to say that it can't happen or that it is definitely not going to happen."

Weale said the risks include a renewed hike in unemployment as well as declining house prices and another banking crisis. "That could be a sovereign debt crisis or it could be a new liquidity crisis in the private sector."

At least we have a realist on the MPC.

A debt crisis is likely – but it won’t be the UK that causes it, that’s for sure.