Mark Carney yesterday declared the British economy is ‘picking up' but warned that the recovery may prove to be another ‘false dawn'.
The Governor of the Bank of England was in an upbeat mood as he hailed a set of ‘very strong data' since he succeeded Lord King on Threadneedle Street in July, the Daily Mail reports.
But he also sounded a note of caution and said ‘it is early days' and the Bank stands ready to act to stimulate growth ‘if the recovery were to falter'.
His comments were echoed by Lord Wolfson, chief executive of fashion chain Next, who said households are finally getting to grips with their debts and starting to splash out.
But the Tory peer, an advisor to David Cameron, added that a ‘full-blown recovery' could still be a year away as low wage growth and high inflation continues to squeeze family finances.
‘We are not out of the woods,' he said. ‘Things have stopped getting worse but they are not necessarily getting better.'
Recent figures show the economy is experiencing its strongest growth spurt for 15 years - prompting George Osborne to claim that Britain is ‘turning a corner'.
A report by the Office for National Statistics this week showed unemployment fell from 7.8% to 7.7% in the three months to July - bringing it a touch closer to the 7% threshold Carney has said must be reached before the Bank considers raising interest rates.
Giving evidence to the Treasury Select Committee yesterday, the Canadian said Britain was enjoying ‘the strongest run of data relative to market expectations that we have seen in over a decade'.
He told MPs: ‘The economy is picking up and the stimulus is working. We are moving in the direction of the unemployment target.'
But he warned against an early hike in interest rates amid fears it could snuff out the recovery.
‘Our job is to make sure that it is not another false dawn and to make sure that as soon as possible this economy reaches a form of escape velocity so that it can sustain higher interest rates and continue to grow,' he said.
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