Growth forecasts for the UK’s GDP in 2011 have slipped from 1.8% to 1.5%, amid increasingly strong economic “headwinds”, the Bank of England has reported.
With the continuing debt crisis in Europe and the recent downgrading of America’s credit rating, the UK’s economy has suffered and has become weaker since May.
Inflation is also looking likely to reach 5% before the end of 2011, as major growth for the UK is becoming progressively harder to achieve.
However, bank governor Mervyn King maintained that there was still reason for cautious optimism, “The central view is there will be growth. It is a gradual recovery, but it is still a recovery”. He also reported that inflation was expected to slip back sharply in 2012, reaching target rates by the end of 2012.
There was better news around Europe this morning, as European share markets opened strongly after the steep falls that had been recorded during Wednesday, even as Europe’s debt issues remain volatile and unresolved.