UK Interest Rates Hike Enters Horizon as Mark Carney Highlights 'Early Signs' of Sustainable Recovery

Britain's economic recovery is beginning to look sustainable, according to the Bank of England governor.

Mark Carney has said previously that when BoE policymakers think the recovery is solid and across all sectors of the economy they will hike interest rates.

The BoE base rate is currently at its record-low of 0.5%. It has been this low for over five years as part of ultra-loose monetary policy to support lending to consumers and businesses in the struggling economy after the financial crisis.

According to the International Monetary Fund (IMF), the UK economy will grow by 2.9% in 2014 – the fastest rate of any Western economy.

"There is every sign that the recovery is starting to broaden out and I would describe our attitude at the moment as prudently optimistic," said Carney at a meeting of business leaders in the south west of England, according to the Bristol Post.

"What is important is that we see longer-term growth, and the view that we are getting from businesses here in Bristol is that the signs coming from the economy are consistent with improved longer-term growth."

He added: "We all want the recovery to be sustainable and the early signs are consistent with that. But we need to see real growth in every sector and in the current level of wages."

Wages are rising again in real terms after pay growth caught up with price inflation, but there is much lost ground to catch up. Office for National Statistics (ONS) data shows wages are worth around the same as they were in 2003.

Rebalancing the economy has also been a headache for Chancellor George Osborne.

There is a consensus that the UK relies too heavily on consumption. The government had hoped for a trade led recovery, but ongoing global economic weakness – such as the eurozone crisis and a slowdown in China – has weighed on demand for British exports.

Instead households have worn down their savings to spend out and help lift the economy. And a revival in the housing market amid cheaper mortgages thanks to the Help to Buy scheme has also powered the recovery.