A top British financial official warned on Tuesday that the data on country’s fourth quarter productivity are likely to be “abysmal”.
The announcement was made by the Bank of England Monetary Policy Committee member Kristin Forbes. Nevertheless, she emphasized that the underlying trends were more important than a single data point.
“It looks like fourth-quarter productivity growth is going to be abysmal. That’s part of the trade-off of strong employment growth with moderate overall GDP growth,” Reuters has quoted Forbes as saying at a meeting of the Henry Jackson Society think tank at Britain’s parliament.
She said that productivity developments would be key to her decision on when to vote to raise BoE interest rates for the first time since the financial crisis. Weaker productivity would require an earlier interest rate rise.
In a speech to the society, released on Monday, Forbes said she believed there was little spare capacity in Britain’s labour market, but that the recent slump in oil prices allowed the central bank the luxury of time to check that the tight job market was raising wages.
Other reports earlier said Britain’s economy is losing momentum, knocked by weaker household spending and worries about the global outlook.
The Guardian said in October that business activity grew at the slowest pace for more than two years in Britain’s dominant services sector.
Also, a Reuters poll of economists last year showed that new business was also coming in at the slowest pace since April 2013.
In a separate survey, the chief financial officers (CFOs) of some of Britain’s biggest companies last year reported a sharp rise in uncertainty facing their businesses and said that they had scaled back their expectations for investment and hiring over the coming year.