Beijing doom and gloom is overblown

BORROWING costs will rise ‘sooner rather than later’ and the ‘widespread pessimism’ about China is overblown, a member of the Bank of England’s interest-rate setting committee has predicted.

Kristin Forbes, pictured, who sits on the Bank’s Monetary Policy Committee, said the economy has only limited exposure to the problems seen so far in developing nations.

She said Britain would not be immune if there was a sharper than expected slowdown in emerging economies or a ‘financial crisis of some type’. But she described the impact so far as ‘manageable’.

In a speech in Brighton, she predicted growth in the economy would continue, albeit more slowly.

‘Despite the ‘doom and gloom’ sentiment, the news on the international economy has not caused me to adjust my prior expectations that the next move in UK interest rates will be up and that it will occur sooner rather than later.’

Only one of nine MPC members voted to raise interest rates from their record low of 0.5pc at its meeting earlier t his month. Bank officials have been trying to prepare households for a rate hike and governor Mark Carney has been hinting that it could happen early next year.

Expectations of a rise have helped drive the pound up against the US dollar for the last two weeks. Forbes also urged British businesses to f ocus on opportunities in emerging markets, claiming that the UK could increase exports by £23bn by 2020 if it follows the example set by the US. Her attempts to allay concerns about China were echoed by HSBC’s chief executive Stuart Gulliver. He said: ‘On balance I don’t believe that China will have a hard landing.’