Wednesday June 25, 12:57 PM
BoE's Gieve says the worst is still to come for UK economy UPDATE
(adds more details, quotes)
LONDON (Thomson Financial) - Bank of England outgoing deputy governor John Gieve said on Wednesday he believes the worst is still to come for the UK economy.
Speaking during a roundtable discussion published in Prospect magazine, Gieve said that what started as a marked turndown in the commercial property market is now spreading to the housing market and that he expects 'a downturn in economic activity over the rest of the year'.
'So the worst is definitely not over in that sense,' he said.
Gieve, who is due to stand down from his post overseeing financial stability next year, said regulators needed to consider compelling banks to set aside more capital in the good times so they could more easily absorb losses during a downturn.
'The financial system amplified the (economic) cycle, both on the upside and now on the downside, more than anyone expected. This is why we are asking whether regulators and central banks could now be doing more to damp down the cycle,' he said.
Prospect magazine said the discussion took place on May 22, before the news broke that Gieve is to leave the BoE once the new committee for financial stability is established next year.
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