He said he had backed a £50bn increase in the £325bn of quantitative easing (QE) programme because "we should be concerned about what is happening in the euro area and concerned that the world economy seems to be slowing rather than picking up – that is something that is bound to affect us".
He expressed particular fears about signs of a slowdown in Asia and the US, and said he remained "pessimistic" about the euro crisis. "In the last six weeks... I am struck by how much has changed since we produced our May inflation report," he said. "Over two years now we have seen the situation in the euro area get worse and the problem being pushed down the road." In the UK, he said, "we're facing an enormous economic problem".
His warning about the nation's prospects was far stronger than any before. Last year, he said the UK was in the middle of "seven lean years" – suggesting a full recovery was within sight in 2014.
The scale of the country's economic troubles has been underlined by the slump back into recession in the six months to March. The economy is now smaller than it was 18 months ago and many economists expect the double-dip to last until June at the earliest.
Other members of the Bank's Monetary Policy Committee appearing before the TSC said the crisis would have been far deeper had it not been for QE and low rates. Ben Broadbent said: "If these things had not been done, we would be facing the Great Depression or worse."
David Miles said: "What has been a dreadful few years would have been a catastrophic few years."
Separately, he warned that the Chancellor's "funding for lending" plan to boost the supply of credit to the economy may not actually increase the stock of debt.
Suggesting there would be no net lending target attached to the stimulus measure, he said: "The scheme would still have been a success if it prevented a bigger contraction in lending than otherwise would have occurred."
He also hinted the Treasury would not indemnify the Bank against potential losses.
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