BCO Conference: Interest rates will eventually have to rise sharply, the chief economic adviser to Boris Johnson has warned.
Speaking in Birmingham at the BCO conference’s opening session, Dr Gerard Lyons said he disagreed with Bank of England governor Mark Carney’s assessment that rates would peak at a low level. Higher rates would be needed to curb house price growth, said Lyons.
“Rates will stay low for a long time,” he said. “They will go up gradually but they will eventually go to a high level.”
Lyons was upbeat on the world economy and optimistic about the UK’s economic prospects. “Next year it’s likely that the economy will lose some momentum but it should grow close to 3%, he said. “Even though it’s a consumer-led recovery at the moment, there is every likelihood that investment will kick in.”
While fellow panellist Isabel Oakeshott – who is The Sunday Times’ former political editor and biographer of David Cameron – warned of potential political upheaval over the next two years, Lyons downplayed the threat of perhaps the biggest of them all: a referendum on future UK membership of the European Union.
“If we left and did the right things, the UK economy would continue to do very well,” he said.
damian.wild@estatesgazette.com
