Bank of England governor Sir Mervyn King warned today of the 'risk of a storm heading our way from the Continent' as he flagged the eurozone as the greatest threat to the UK's recovery.
Sir Mervyn's warning came as the Bank said the UK economy will not return to pre-financial crisis levels before 2014 after it cut its growth forecasts for the next two years. The Bank now expects growth of around 0.8 per cent this year.
And the squeeze on consumer spending is set to maintain its grip as the rate of inflation falls more slowly than previously expected, remaining above the Government's two per cent target for the next year or so.
While the Bank said it did not see a 'meaningful way' of factoring in an extreme financial event - such as the collapse of the euro - into its projections, it said the biggest risk to recovery stems from the single currency bloc, the UK's main trading partner.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereComments are closed on this article