By Philip Uglow
LONDON (MktNews) - So far the slowdown in the US economy has not had any great impact on the UK, Stephen Nickell, a member of the Bank of England's Monetary Policy Committee, said Tuesday.
In an exclusive interview with Market News International, Nickell said, "In the great sweep of things, the impact so far has not been very great, but I guess that's to be expected."
Nickell did say that a careful look at firms which are exporting directly to the US might reveal some impact. He also added that given the close connection between the financial markets in London and the US, there may be something feeding through there as well.
"I guess we're waiting to see what sort of impact there's going to be," Nickell said. On the US downturn, Nickell said that although he goes along with the majority view in thinking that it will probably turn out to be benign, he added, "There is a chance the US downturn will become more serious -- that's a risk."
Nickell noted that the downward risks came from a possible decline in consumption growth and questioned whether the Federal Reserve would be able to stop it. "These things usually go very bad when consumption reacts because people have, as in the US, big debts. If their collateral on those debts consists of a lot of assets whose prices have been falling fast, then there is a situation where consumption can go down fast, and that's when you get a serious recession."
However, this is not Nickell's central case, and he noted that at the moment consumption doesn't seem to be falling at a fantastic rate. "Today's data don't look too bad, the forward looking indicators don't look too good. So we just have to wait and see," he said.