The Bank warns of slow growth on the horizon

THE BANK of England downgraded the UK’s growth prospects yesterday, with governor Mervyn King warning that the economy is still in the midst of a crisis.

GDP growth will come to around 1.5 per cent this year, the Bank estimates -- down from the 1.8 per cent forecast in its last inflation report.

In 2012 the Bank expects the UK’s economy to expand by around two per cent, a downgrade of half a per cent from its previous estimate.

King said: “2008 was not the end of the crisis – it was merely one stage. We are going through the next stage now... There are a number of [global] headwinds not least the public and private debt overhang, and these are becoming stronger by the day.”

The Bank’s inflation forecasts appear to show a modest downgrade in its expectations for price pressures in 2012.