‘EU dead in the water!’ says Bank of England MPC member

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EXPORTS to the EU, the UK’s biggest trading partner, are ‘dead in the water’, a member of the Bank of England’s interest rate-setting Monetary Policy Committee (MPC) blurted out yesterday.

The coalition government has set the target of doubling the value of UK exports to £1 trillion by 2020, but this won’t be helped by the EU, according to MPC member, David Miles.

Yesterday it was announced that growth in Germany and France, the eurozone’s two largest economies, ground to a halt in the second quarter of 2014 and Miles said it was ‘difficult’ to see UK exports growing whilst the EU’s difficulties continue.

He explained that there is no growth in UK exports because demand from the EU is zero. Miles said: ‘So our single biggest export market is, I’m tempted to say, dead in the water.

‘It hasn’t been growing at all. And it’s pretty difficult in that environment to see exports growing very strongly. So the recovery, very welcome as it is, has been a bit dependant on consumer spending.’

But consumer spending, which has been driven by historically low interest rates, is also set to go into reverse.

The Council of Mortgage Lenders (CML) warned yesterday that the numbers of homes to be repossessed as a result of homeowners failing to keep up with mortgage payments is set to soar.

A total of 5,400 properties were repossessed in the second quarter of the year, the CML said, down 1,000 on the previous three months, and down by 2,200 on the same period a year ago.

However, the CML said, when interest rates rise, homeowners would only be able to cope with rises in ‘baby steps’.

‘Rates will rise at some stage, of course, and borrowers should be planning for that now,’ said Paul Smee, director general of the CML.

‘We welcome the message from the Bank of England that, when it raises rates, it plans to do so in a series of “baby steps”, matched to a careful assessment of the ability of households to deal with higher borrowing costs.’

• The US Network equipment giant Cisco Systems announced plans to cut 6,000 more jobs yesterday – its fourth jobs cull in four years. It began aggressively cutting its payroll in 2011, when it said it would shed 11,000 posts. Thousands more were cut last year.

On Wednesday, Cisco reported net income of $2.2bn (£1.3bn) in the fourth quarter, down from $2.3bn a year ago. Cisco’s chief executive, John Chambers, said that the company was ‘executing well in a tough environment,’ adding that the company would manage costs ‘aggressively’.

Chambers blamed the mass sacking on ‘emerging markets’. ‘Unfortunately, as we look out, we don’t see emerging markets growth returning for several quarters and believe it could get worse.’