A key BOE policymaker believes the state of the banking system "bodes poorly for the sustainability of the coming economic recovery", and has cast doubt on whether the Bank's policy of quantitative easing has succeeded.
Adam Posen, the newest member of the Monetary Policy Committee, said yesterday: "The relative limits in the UK on availability of non-bank financing for smaller companies may constrain emergence of a sustainable private-sector led recovery."
Posen is correct the money that has been pumped into the system in the UK' just as in the US, has been directed very narrowly at the banking sector.
This is creating a distorted recovery that is about to end, for the US and UK.
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