King admits recovery slower than expected

THE Bank of England has admitted that the economy will take longer to recover than expected.

In its latest quarterly Inflation Report, the bank predicts that growth will reach about 3.2 per cent in the second quarter of 2011, weaker than an earlier prediction of 4 per cent.

Inflation will peak at 3.3 per cent before easing to 0.9 per cent and staying below the Bank’s 2 per cent target.

The economy only grew by 0.1 per cent in the final three months of the year despite the record low level of interest rates.

A further £200bn has been injected into the economy through quantitative easing.

Bank of England Governor Mervyn King said the economy would “bump along the bottom”, although he was hopeful of a “gradual recovery” in output.

He added that there were "signs that many economies are on the mend", although "much uncertainty remains" about a sustained rise in global demand.