UK recovery 'only just starting'
12 Nov 09
The UK economy has "only just started" along its road to economic recovery, according to Bank of England governor Mervyn King. In its latest inflation report, the Bank indicated it would be late 2011 before the UK economy recovered to the level it was at before the recession
Mr King warned inflation may "rise sharply over the next few months", and also said the Bank was "open minded" about extending its programme of pumping money into the economy.
Last week, the Bank extended its programme of quantitative easing by £25bn, bringing the total amount the Bank has pumped into the economy to £200bn.
The Bank's rate-setting Monetary Policy Committee (MPC) also kept UK interest rates on hold at 0.5 per cent for the eighth month in succession.
Mr King said the increase in inflation would be triggered by VAT returning to 17.5 per cent on 1 January 2010 and higher petrol prices.
However, he said inflation, which is currently at 1.1 per cent, would then fall back in the medium term.
"The past year has been extremely painful for most economies around the world," said Mr King.
"There is a more buoyant picture looking ahead, that is encouraging. But this does not alter the extent of the challenges facing the economy."
To download the Bank of England’s full inflation report for November 2009, click here