Families face 'economic squeeze'

Friday July 23rd 2010

The Bank of England's chief economist has underlined the importance of income protection insurance by warning that the economy faces a "triple whammy" of high inflation, high unemployment and sluggish growth.

Spencer Dale said the UK's finances would not recover for "an awfully long time", adding that families should prepare themselves for a squeeze on living standards.

While GDP figures have been boosted by firms rebuilding supplies depleted by the recession, Mr Dale said the effect would soon wear off, explaining that the Bank - already stretched to breaking point by record low interest rates and the £200 billion quantitative easing programme - could do little else to help the economy.

His comments, a stern reminder of the dangers of excessive economic optimism, come as hopes of rebalancing the economy by means of an increased focus on exports flounder on the rocks of austerity measures across the Eurozone - the UK's biggest trading partner.

Copyright © Press Association 2010

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