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UK Economy to “Zig-Zag” Towards Recovery

In the latest quarterly inflation report from the Bank of England, Sir Mervyn King said growth was likely to recover gradually, although “substantial headwinds” will hamper the recovery and there is likely to be a “zig zag” pattern of alternating positive and negative growth.

Growth of one per cent (1%) was forecast for 2012 with 1.8% forecast for 2013.

Sir Mervyn King added that inflation, currently 3.6 per cent, is likely to fall to the targeted two per cent by the end of the year, and be below target for much of the following two years.

Sir King said:

“We can take some reassurance from the fact that inflation is now falling. But we are steering a course through choppy waters, and many people are experiencing difficult times.”

“The fiscal consolidation and tight credit conditions at home and the weakness of our major overseas trading partners are acting as a drag on growth.”

He added:

“We are moving in the right direction.”