BoE's Weale says tight credit may be hurting UK economy

Thu Dec 13, 2012 9:00pm EST

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LONDON, Dec 14 (Reuters) - Scarce credit and fears about the
cost of future borrowing may be holding back Britain's economic
recovery, a Bank of England policymaker said on Friday.
    In a speech to be delivered in New Zealand, Martin Weale
focused on the use of economic modelling to analyse policy,
without making any comments on monetary policy in Britain.
    "People are more likely to be tolerant of any given level of
debt if they believe that they can obtain further credit, should
the need arise, than if they think they are up against a credit
limit. So a fear that credit is tight itself encourages
deleveraging," he said, according to the text of his speech
provided by the BoE.
    "Tightening of credit and fear of tight credit has affected
both firms and households and, in the United Kingdom at least,
this may be limiting the scope for recovery," he added.
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