Boe’s Bailey warns of UK’s productivity in the challenge to Reeves

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The Governor of the Bank of England has suggested that the official financial predictor in the UK is very optimistic about the possibilities of recovery in productivity growth, and is questioned by a very important matter of public financial resources.

Andrew Billy said that the budget responsibility office was expected to have a recovery in the growth of productivity after a decrease in the aftermath of the financial crisis, but the Bank of England was “skeptical.”

“If you are going to take what I call the OBR story, I think you will say it was a financial crisis and that this effect will rise,” said Billy. “I am a little skeptical about it.”

The ruler’s words will add concerns about predictions that constitute a decisive factor in the OBR view of public financial resources, given the role of high productivity in paying higher tax revenues. In its outlook in March, OBR warned that a “low productive scenario” is an alternative that will lead to the UK government losing its main financial goal, while the current budget remains in a deficit until the end of the decade.

After the financial crisis, OBR assumed the potential growth growth to its previous rate. However, it has been forced to restore estimates with disappointment in disappointing data, which reduces the assumption of medium -term productivity growth from about 2.2 percent to 1.25 percent.

Her last look is still more positive than many other predictors, which raises anxiety Speculation Counselor Rachel Reeves can reduce a large OBR level in the fall, which requires high taxes or other measures to close the deficit.

“They have more than the return of productivity growth to the pre-financial pattern-what we do,” said Billy at the Economic Affairs Committee of the House of Lords. OBR refused to comment.

The governor said that he would require significant technological developments to push much higher production growth, pointing to artificial intelligence as the most likely candidate.

But he said that such innovations took a long time to appear in actual productivity data. He added: “We all mainly try artificial intelligence at the present time.”

Billy argued that three main “opposite winds” were pressuring public financial resources through a group of advanced-financial-pressure economies from the aging of the population, the cost of adapting to climate change, and the end of the distribution of peace profits after the Cold War, which forces the countries to raise defense spending.

He was speaking as ready leaders Collect the NATO summit President Donald Trump is calling for the allies to raise the defense of the defense to 5 percent of the gross domestic product.

“I think it is important – and I do not want to look a preacher on this matter – that we have a suitable discussion with the public about the effects of all this and what it means to the development of the economy and the development of public debt.”

Anxiety in the global bond markets has increased due to the sustainability of the burdens of large economies debt, as the highest interest rates have gathered since the epidemic with the issuance of huge sovereign debts, which are expected to reach 17 dollars in the countries of the Organization for Economic Cooperation and Development this year.

The costs of debt interest as a share of economic product are at the highest levels in decades, and it is expected that it will add defense spending and other modern financial stimulus ads to pressure.

Billy asked about the market’s focus on the upcoming OBR forecast for a period of five years for the current budget, given the financial doubts that await us. OBR said in March that Reeves will meet with the difficulty of its main base to achieve the current budget balance in a little less than 10 billion pounds.

He said: “There is a risk to explaining excessive predictions for a period of five years.”

The ruler added that the Bank of England will soon be an internal review of plans to reduce its public budget by tightening the quantitative (QT), before a decision on bond sales in September.

Pelly said this would take into account the recent discounts in bond prices, amid turbulent conditions in global markets.

“It would be more interesting this year, because we had a lot of decline in the return curve,” Billy said, stressing that this was seen in all major economies, and therefore it was not driven by QT. “It is a little new.”