POLITICS

Bank Of England Official Says Time For Interest Rate Rise 'Approaching' (VIDEO)

10/06/2014 10:46 BST | Updated 10/06/2014 10:59 BST

Britain's economy can "grow a little further" before interest rates need to rise, a member of the Bank of England's Monetary Policy Committee has suggested.

Ian McCafferty said that the "appropriate" time for Bank policymakers to raise the cost of borrowing was "approaching", just days after MPC members to keep interest rates their five-year low of 0.5%.

"The time when it becomes appropriate for interest in the UK to start to rise back to a more normal level is approaching," he said, taking part in a phone-in on LBC radio.

"But we've also said one, that we think there is scope for the economy to grow a little further before we really get to that point and secondly once we get to that point and thereafter than any rises in interest rates that we anticipate we hope will be only gradual for quite some time to come."

McCafferty's comments come as the Bank of England's Systemic Risk survey of financial executives found that confidence in the stability of the economic recovery was at its highest level since the 2008 crash.

Meanwhile, a new report by employment group Manpower found that the outlook for jobs is at its strongest level since the recession, with increasing numbers of employers planning to take on staff.

McCafferty told LBC radio: "I think a year ago, with the economy flat on its back it's a very easy decision to make as to quite what the appropriate level of interest rates is.

"After a year of relatively strong growth in which we have seen a sharp fall in unemployment and some very modest improvement now in nominal pay scales although that's still very modest.

"Then you have to say that the decision becomes more balanced. But as I said before I think the view amongst the committee is that given the depth of the recession and the loss of GDP that we faced over the course of the crisis and the ensuing recession we can still see the economy running a little bit longer."