The Bank of England has cut its growth outlook for the UK economy, citing shaky business and consumer confidence, tight bank lending and the government's spending cuts.The central bank's warning that Britain faces a protracted and "choppy recovery" came as official data showed a sharp rise in long-term unemployment and a smaller than expected fall in the number of people claiming jobless benefits.
The Bank of England has cut its growth outlook for the UK economy, citing shaky business and consumer confidence, tight bank lending and the government's spending cuts.
The central bank's warning that Britain faces a protracted and "choppy recovery" came as official data showed a sharp rise in long-term unemployment and a smaller than expected fall in the number of people claiming jobless benefits.
The Bank of England on Wednesday revised down its forecasts for UK GDP growth over the next few years and now expects inflation to be above target until well into 2012.The lower growth forecasts come as global growth has shown signs of slowing and in the face of the problems in Europe.Higher inflation forecasts reflect in part the rise in valued-added tax slated by the government to hit from next January, as well as the fact that the Bank has consistently underestimated how strong inflation is going to be. "Risks to growth remain weighted to the downside," the Bank's quarterly inflation report notes.Mervyn King, the governor, denied that the downgrade to growth forecasts was the result of the government's austerity Budget.
The lower growth forecasts come as global growth has shown signs of slowing and in the face of the problems in Europe.
Higher inflation forecasts reflect in part the rise in valued-added tax slated by the government to hit from next January, as well as the fact that the Bank has consistently underestimated how strong inflation is going to be.
"Risks to growth remain weighted to the downside," the Bank's quarterly inflation report notes.
Mervyn King, the governor, denied that the downgrade to growth forecasts was the result of the government's austerity Budget.
