Bank Of England Lowers Growth Forecast For UK
The Bank of England has lowered its UK growth forecast and said the economy will remain flat for the rest of the year.
The new assessment comes after bank governor Sir Mervyn King dropped the forecast from 0.8% three months ago and 2% a year ago.
He said: "The overall outlook for growth is weaker than the outlook in May."
Looking ahead, the bank also sharply cut its forecast for medium-term growth from 2.8% to 2.1%, citing worries that factors hurting growth since the financial crisis may be more long-lasting than first thought.
"Our efforts to bring about a rebalancing of the UK economy will require patience," he said.
The consumer prices index has continued to fall in 2012 and forecast to drop further.
The inflation dip is expected to ease upward pressure on the cost of living, which has seen workers struggle with wage stagnation.
Sir Mervyn said the underlying picture of economic output has been at best "broadly flat" over the past two years and has "continually disappointed" recovery expectations.
He said productivity growth has been "unusually low" and that "the economy will continue to face headwinds".
Sir Mervyn said that domestic deficit-cutting, tight credit conditions and the eurozone crisis were making it difficult for the economy to recover from recession.
Asked about the effectiveness of the recently implemented Funding For Lending stimulus package, Sir Mervyn said UK banks needed to improve their loan programmes.
He said: "Put bluntly, if they want to get cheap funding from us, they have to lend more."
:: On the foreign currency markets, sterling rose to session highs after Sir Mervyn said cutting interest rates would damage financial institutions and would be partly counterproductive.
what do you think?
Not rocket science is it, people are not spending as much so receipts are down. Banks are sitting on billions of pounds of tax payer money and are creaming it. Whole things a joke and a big one at that!!
I bet osbourne will stick on the road to ruin and guess what???? It's all labours fault!! Oh wait a minute, it might be the euro crisis this time round!
Steven. Politicians have one aim in life.To get re elected and preserve their priveliged lifestyle. Give it 3 years and Ed M will be saying its all the Tories fault, its the euro crisis or like Brown before him its the global downturn. Everything that goes right is down to them, anything that goes wrong is someone elses fault.
I'm aware of the that Dave, politicians need to be more accountable (which will never happen) i see labour as the lesser of 2 evils as there is no realistic alternative.
Steven Oh how I agree with your comment that there is no realistic alternative. This lot are making a mess and waiting in the wings are the same people who made a mess last time. And they say we have a choice
Well there is the lib dems? Ha ha ha ha ha ha
Come on Steve do I look stupid ! They used to be the party of protest but I think Mr Clegg has firmly put that idea to bed
An often overlooked and excellent point Dave. Their number 1 priority is to be elected every 4 years.
King has handled the global economic crisis as bad as Osbourne. Yet another financial 'expert' who has absolutely no idea how to solve the country's economic problems but is happily picking up a very large salary. People aren't spending for two reasons A) they haven't got it or B) they're scared to lose what they have. Increasing peoples personal debt is not the answer.
King gets on my nerves. Does he not have his own brain??? He is simply the puppet of the of whoever is in power at the time. He's tells everyone what they want to here and than is the bringer of bad news a few months later and this bloke is an expert? Pathetic.
We are really s.c.r.e.w.e.d. folks. We have incompetence in the Bank of England. We have incompetence in Osbourne and Cameron. We have nothing but weakness, ineffectiveness and pure cowardice in the Lib Dems, who are now insignificant, so I should not have even mentioned them. We have silence and incompetence from an alleged opposition. Who are the main opposition today by the way? I never hear anything from them. This collective incompetence is based on pure avarice and the desire for undeserved power, greed and wealth. I am with my wonderful friends below who call for an alternative. We should all vote for the Monster Raving Loony Party because they could do no worse.
Michael Do you not think that we have 3 raving loony parties already ?
Nice one Dave but at least it would be a bunch of new faces.
I've been thinking about our economic problem. Why do we not find out which is the most successful economic country in the world then collectively, we could write to them and ask them to come over here and sort our problems out? We would then be able able to kick out our current politicians, rent out parliament and give our helpful visitors free accommodation in Milton Keynes.
It's China. Conquer from within, Make cheap, sell cheap, when dependant on them cost goes up. Simple and it works.
Very one's an expert on the economy .just like expert football managers .it's not just one thing that's causing the problem and it's not just one country with problems . Its world wide and it's all about greed .so you can blame who you like . But as long as they keep throwing money at the euro nothing is going to change until the euro is allowed to crash and burn
We could stop boom & bust easy, make it law that any government has a spending budget & if it goes over this it cannot be re-elected.
Go one better - it comes out of their own pockets
awww hasnt the tax cut for the rich created more jobs then. wake up englands working class
way to go Osborne !! competely clueless idiot !
All of this banking greed & fraud happened under Merve "the swerve" watchful eyes! An honorable man would resign!
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The economy has been flat since Cameron took over.lol