Fresh momentum in UK economy as central bank gets new governor

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Fresh momentum in UK economy as central bank gets new governor

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The Bank of England’s new boss got some good news on his first day.

As Canadian Mark Carney took over as governor of the UK central bank we learned that British manufacturing enjoyed its strongest growth in more than two years in June and new orders rose even faster.

There was also a boost for the UK’s housing market with mortgage approvals in May at their highest level since December 2009.

An improvement in two of the sectors hardest hit by the financial crisis might give Carney reason to move cautiously as he starts the task of getting the British economy into a higher gear.

The first foreigner to head the bank in its more than 300 year history, Carney is however widely expected to take a more active stance towards monetary stimulus once he gets settled in to the job.

One piece of newly released data he will perhaps be looking at closely was that lending to non-financial firms fell by 1.27 billion pounds (1.48 billion euros) in May, having dropped by three billion pounds (3.5 billion euros) in April. Lending to smaller firms was down by 452 million pounds (527.5 million euros).

Carney, the former governor of the Bank of Canada, has said he wants to get the economy up to “escape velocity” and is widely expected to deploy new tactics to achieve it.

He has yet to show whether he might push for more bond-buying by the BoE which would pump fresh money into the economy. That was something his predecessor Mervyn King favoured but was ruled out by a majority of the bank’s other policymakers.

Carney is expected to use the kind of policy he pioneered as governor of the Bank of Canada by giving markets, households and businesses a clear steer of how long the BoE will keep interest rates at their record low of 0.5 percent.