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| Bank sees slow economic recovery | Bank sees slow economic recovery |
| (30 minutes later) | |
| The Bank of England says that the UK economic recovery is likely to be slow and protracted. | The Bank of England says that the UK economic recovery is likely to be slow and protracted. |
| Its latest quarterly inflation report predicted a 4.5% year-on-year decline in economic growth at its lowest point. | |
| It said that the economy won't begin to grow again until the middle of next year. It had earlier indicated that the recovery would start later this year. | |
| The forecasts are gloomier than the government's own projections for a 2009 decline in GDP of around 3.5%. | |
| "The prospects for economic growth remain unusually uncertain, reflecting the exceptional economic and financial factors affecting the outlook," the Bank said in the report. | |
| There are pretty solid reasons for supposing that there will be a recovery next year, but also pretty solid reasons for questioning if that will be sustained Bank of England Governor Meryvn King | |
| Jonathan Loynes, an economist at Capital Economics, said that Bank of England had injected "a sensible element of caution amidst recent excited talk of the green shoots of recovery". | |
| "This appears at least partly to reflect a gloomier view on the outlook for bank lending," he said. | |
| 'Healing time' | |
| Bank of England Governor Mervyn King also said that the economy would take time to heal. | Bank of England Governor Mervyn King also said that the economy would take time to heal. |
| "There are pretty solid reasons for supposing that there will be a recovery next year, but also pretty solid reasons for questioning if that will be sustained, " Mr King said. | "There are pretty solid reasons for supposing that there will be a recovery next year, but also pretty solid reasons for questioning if that will be sustained, " Mr King said. |
| "But in the light of the state of balance sheets particularly in the financial sector, the committee judges that the risks are weighted towards a relatively slow and protracted recovery." | |
| INFLATION REPORT The Bank of England report in detail [2.6 MB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here Recession tracker: Unemployment | |
| He said that the timing and strength of the recovery was "highly uncertain". | He said that the timing and strength of the recovery was "highly uncertain". |
| Mr King said he saw some reasons for optimism and the pace of economic decline had moderated. | Mr King said he saw some reasons for optimism and the pace of economic decline had moderated. |
| He also that government plans to stimulate the economy and the weak pound would help. | He also that government plans to stimulate the economy and the weak pound would help. |
| But he was also cautious and said problems in the banking sector had not yet been fully resolved. | But he was also cautious and said problems in the banking sector had not yet been fully resolved. |
| The Bank forecast that inflation should fall to around 0.5% by the end of this year before picking up to around 1.2% in two years' time - below the Bank's target rate of 2%. | |
| Quantitative easing | |
| Mr King said that said it was too early to ascertain whether the Bank's new policy of quantitative easing was successful but said he had not been disappointed by its effects. | |
| With interest rates as low as they can go, the Bank has been pumping money into the banking system through quantitative easing to stimulate the economy. | |
| The process involves the Bank effectively printing money to buy government and corporate bonds. | |
| "It will take 6-9 months I think before we see more evidence," Mr King said. |