Newspaper article The Journal (Newcastle, England)

The Outlook Has Got Worse, Admits Governor

Newspaper article The Journal (Newcastle, England)

The Outlook Has Got Worse, Admits Governor

Article excerpt

THE UK's economy will not grow as quickly as previously expected and faces serious threats from the debt storms lashing the eurozone, the Bank of England warned yesterday.

GDP is set to grow by around 1.4% in 2011, the Bank said in its quarterly inflation report, down from its estimate of around 1.8% in May.

It is the second time the Bank has downgraded the UK's growth forecasts this year, having previously expected growth of about 2%. And next year's growth will also be significantly slower than previously thought at about 2% - down from around 2.5%.

The UK's growth is likely to be "sluggish" but will gradually grow to stronger than normal by 2014, it added.

But many economists said that even after yesterday's downgrades, its forecasts were still too optimistic.

The UK's economy has failed to gather momentum as consumer spending is squeezed because wages are failing to keep pace with the rising cost of living.

And its efforts to increase its exports have also been hamstrung by the slowdown in the world economy. …

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