The Bank of England has cut its growth forecast to close to zero, as the UK economic recession intensifies.
Their latest quarterly inflation report expects to see no economic growth in 2012, after a deeper than expected recession in the second quarter, with GDP falling by 0.7%.
This is a big change from the Bank of England forecast only two years ago, when they expected to see 2% economic growth in 2012.
Talking about an unpredictable future, Bank of England governor Sir Mervyn King pointed to the eurozone debt crisis and its impact on the UK.
He believes it is ‘unrealistic’ to think we have come to the end of the financial crisis in Europe.
Looking further ahead, the Bank expects modest growth of 1.9% in 2014, down from the 2.4% they were forecasting last quarter.
In 2014, the Bank expects to see growth of 2%.
This assessment of the UK economy points towards further quantitative easing and an interest rate cut during the second half of the year.
Photo credit: Flickr/Tim Green
