ECONOMIC growth will be lower than the Bank of England previously thought, the central bank’s Inflation Report is expected to admit this week.
The Bank had forecast growth for this year of around 1.75 per cent in May’s report, yet economists now see the UK expanding by just 1.3 per cent, according to data compiled by the Treasury.
For 2012 the Bank’s May report forecast growth of almost 2.5 per cent, yet economists widely expect GDP to expand by closer to two per cent.
“The Bank of England will clearly have to lower its 2011 GDP growth forecasts and it may well have to trim its 2012 projections as well,” said Howard Archer of IHS Global Insight.
Inflation slowed to 4.1 per cent in the last reading, but is still expected to hit five per cent as utility price hikes kick in during the third quarter of the year. For two years the Bank has increased the inflation outlook in every Inflation Report.