Bank-rate setter warns it may take five years to rein in state debt

Published on Monday 16 November 2009 21:29

RETURNING the UK's battered public finances to manageable levels could take more than five years, a Bank of England rate setter has warned.

Andrew Sentance, of the monetary policy committee, said the UK was one of three major economies set to rack up deficits of about 10 per cent of gross domestic product this year.

He said "it is likely to take five years, or maybe more", to cut the debt to more comfortable levels. This is longer than Chancellor Alistair Darling's plans to halve the deficit within four years, as outlined in his April Budget.

According to his forecasts, the UK will run deficits of more than 130 billion this year and next as the recession takes its toll.

Mr Sentance's comments come after the Bank's governor, Mervyn King, last week called for a "credible plan" to restore the public finances to health when publishing its latest inflation forecasts.

But Mr Sentance sought to play down concerns that a severe squeeze on public spending would endanger a recovery, saying that would not

"jeopardise the prospects for economic growth if there is sufficient support for demand from the global economy, a competitive exchange rate and a recovery in private sector spending".