Carney in fresh alert over global downturn

MARK Carney last night painted a bleak picture of the global economy – but said: ‘This is not 2008.’

The Governor of the Bank of England said the world ‘risks becoming trapped in a low growth, low inflation, low interest rate’ environment.

‘For the past seven years, growth has serially disappointed – sometimes spectacularly,’ he said in a speech at a meeting of the G20 in Shanghai, adding that sizeable downsize risks plague the world economy.

The Canadian said the world was now at risk of falling into a ‘liquidity trap’ where cutting interest rates and pumping emergency funds into the economy fail to boost growth because households and businesses are so worried about the future they hoard their cash.

Carney, pictured, said the gloomy outlook ‘appears to have been the underlying cause of recent market turbulence’, which has seen share prices around the world tumble and the price of commodities such as oil and copper go into ‘freefall’.

Carney said low interest rates and growth and tougher regulations have hurt banks.

‘However, this is not 2008,’ he said, referring to the last banking crisis that saw US giant Lehman Brothers Collapse and UK taxpayers spend billions of pounds rescuing basket cases such as Royal Bank of Scotland and HBOS.

The Canadian insisted that banks are now ‘considerably stronger’ than they were and central banks such as the Bank of England are not out of ‘ammunition’ despite interest rates at record lows. Earlier this week he said UK rates could fall again.