UK could face stagflation, former Bank rate-setter says

Jonathan Haskel, who was on the Bank's Monetary Policy Committee until last summer, has been speaking to BBC Radio 4's World at One.

Commenting on the interest rate cut, Haskel says: "It's what the market expected but I’m afraid to say that the forecast can be summarised in one word - which the Governor was unwilling to use, but it’s there I think - which is stagflation.

"The economy is in a difficult position. The Bank’s forecast last year for the economy this coming year was for slow growth but inflation and interest rates coming down. But the new forecast, I’m afraid... is for even slower growth."

Haskel, who is now a professor of economics at Imperial College London, added: "It's a stagflationary prospect and I’m afraid it’s not very pretty.”

Stagflation, a contraction of the words stagnation and inflation, is used to denote periods of high inflation and stagnant economic growth.