By Olesya Dmitracova and Tim Castle
LONDON, May 31 (Reuters) - Bank of England Deputy Governor Charlie Bean on Thursday gave the most explicit signal yet that another round of stimulus for the economy could be in the works, but recent comments from other policymakers suggest the bank is still divided on the issue.
Consumer confidence numbers for May on Thursday were also slightly better than expected but still showed the economy mired in a downturn that has pushed it back into its second recession in two years.
Economists say that makes a strong case for the bank to add to the 325 billion pounds worth of extra cash they have pumped into the economy, although only two out of 50 polled by Reuters believe the BoE could do so at its June 6-7 meeting.
Still, the polling also shows a 50 percent chance the BoE will restart its programme of quantitative easing at some point in future, and as much as a 25 percent chance for next week.
“We have the scope to do more asset purchases,” BoE Deputy Governor Charlie Bean told the Eastern Daily Press.
“We will certainly do whatever we can to try and ensure that if events beyond our shores turn out badly we can minimise the impact on households and businesses over here and try and keep the economy recovering. But it will be difficult.”
That contrasted with BoE chief economist Spencer Dale, who said on Wednesday more purchases may not be warranted even if the economy continues to struggle, and the bank should keep its focus on bringing down inflation.
Eyes in Britain are fixed firmly on a euro zone crisis that the government, anxious to shift the blame for the downturn away from sharp spending cuts, says has depressed already weak confidence among consumers grappling with falling real incomes and a dearth of jobs.
The economy contracted by 0.3 percent between January and March and growth in the second quarter is endangered by the mounting worries about the survival of the euro.
Bean said it was reasonable to think that the recovery of the British economy would be slow and interest rates were more likely to stay low than “rocket up”.
That chimed with the latest economic data and news from British companies.
Consumer confidence in May was still weaker than a year ago and far below its average over the past four decades, a survey by GfK NOP showed.
“It is doubtful whether we will see a sustained rise in underlying confidence, given the continued crisis in the euro zone, rising borrowing rates and falling financial wealth,” said Martin Beck, economist at Capital Economics.
Subdued demand on the back of weak labour market conditions kept British house prices broadly unchanged in May compared to a year ago, mortgage lender Nationwide said.
Although businesses in Britain intend to increase their workforces in the coming year, it is likely that employment growth will continue to be driven by increasing numbers of part-time jobs and below-inflation pay rises, according to the Confederation of British Industry.
The erosion of real incomes, combined with April’s torrential rain, contributed to a 10.4 percent annual plunge in sales in Britain and Ireland at Kingfisher, Europe’s biggest home improvements retailer.
Bicycles and car parts retailer Halfords said that sales over the last two months had been “very disappointing” and tour operator Thomas Cook posted a steep first-half loss.