BoE: Interest rates to stay lower for longer
Haldane, who sits on the nine-member Monetary Policy Committee that sets interest rates, said the economy was suffering from falling real wages and flat productivity.
In a speech in Kenilworth, he said: “I am gloomier.
“That reflects the mark-down in global growth, heightened geo-political and financial risks and the weak pipeline of inflationary pressures from wages internally and commodity prices externally.
“Taken together, this implies interest rates could remain lower for longer, certainly than I had expected three months ago, without endangering the inflation target.
He added: “The UK economy is as weak as at any time in the recent or distant past. It is firmly on the back foot.
“Rather peculiarly, the UK economy appears to be writhing in both agony and ecstasy.”
His language contrasted with his last major speech in June, when he used a cricketing metaphor to say he wanted to be on the “front foot” when it comes to raising interest rates.
He listed several “reasons to be fearful”.
He said productivity has been flat for six years, which has not happened since World War Two, while he highlighted how real wage growth is close to minus 1% per year, adding that wages have grown in just three of the last 74 months.
Haldane said: “These trends are also closely linked. Weak productivity has constrained UK companies’ ability to pay higher wages, such that productivity and real wages have fallen in lockstep since 200.
“And this combination of a weak supply side and weak pricing pressures has in turn generated the need for low or negative real interest rates.”