This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/go/rss/int/news/-/news/business-17040658

The article has changed 7 times. There is an RSS feed of changes available.

Version 0 Version 1
Bank of England says UK economy 'to zigzag' this year Bank of England says UK economy 'to zigzag' this year
(40 minutes later)
The UK economy will "zigzag" this year, dipping in and out of growth, Bank of England chief Sir Mervyn King has said.The UK economy will "zigzag" this year, dipping in and out of growth, Bank of England chief Sir Mervyn King has said.
The Bank's quarterly inflation report predicts inflation will continue to fall in the coming months.The Bank's quarterly inflation report predicts inflation will continue to fall in the coming months.
However, it now predicts inflation decline to 1.8% by 2014, not as low as the previous estimate of 1.3%.However, it now predicts inflation decline to 1.8% by 2014, not as low as the previous estimate of 1.3%.
Sir Mervyn also repeated that the eurozone crisis remained a big risk, but said that the UK economy should recover gradually.Sir Mervyn also repeated that the eurozone crisis remained a big risk, but said that the UK economy should recover gradually.
Sir Mervyn said that some business surveys had indicated a pickup in the economy at the start of this year, but said this may not last: "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 said that some business surveys had indicated a pickup in the economy at the start of this year, but said this may not last.
"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," said Sir Mervyn.
"The underlying need for repair of balance sheets means that the path of recovery is likely to be slow and uncertain. For much of this year, there is likely to be a zigzag pattern of alternating positive and negative quarterly growth rates.""The underlying need for repair of balance sheets means that the path of recovery is likely to be slow and uncertain. For much of this year, there is likely to be a zigzag pattern of alternating positive and negative quarterly growth rates."
He also said the extra Bank Holiday for the Queen's Diamond Jubilee made it even harder than usual to interpret the official estimates of growth.He also said the extra Bank Holiday for the Queen's Diamond Jubilee made it even harder than usual to interpret the official estimates of growth.
Unpredictable 'Painful adjustment'
Sir Mervyn also said that this week's slowdown in the rate of inflation figures out this week, from 4.2% to 3.6%, would aid economic recovery as people's spending power became less squeezed. Sir Mervyn said the slowdown in inflation would aid economic recovery as people's spending power became less squeezed. Figures released on Tuesday showed that Consumer Prices Index (CPI) inflation slowed to 3.6% in January, from December's rate of 4.2%.
But he warned: "These remain, though, challenging times for the UK economy. Substantial headwinds are hampering our recovery and rebalancing. Savers have seen the value of their savings eroded by inflation, which has not been compensated for by increases in the rate of investment return, for example, from interest rates.
And he said that there were a number of factors that were completely unpredictable. Sir Mervyn said many savers were receiving negligible returns, and these people, and the millions out of work had had their spending power reduced sharply.
As well as the chance of a eurozone breakup, for which he said contingency plans were being prepared - although he would not be drawn on detail - there were other potential political flashpoints. He said although he had "deep sympathy" for savers, increasing interest rates to help them could be counterproductive as it would damage the fragile economy.
"Disruptions to the supply of oil, for example from Iran or Nigeria, could pose an upside risk to the inflation outlook," said Sir Mervyn. "These are consequences of the painful adjustment prompted by the financial crisis and the need to rebalance our economy," he said.
"Unfortunately there is no easy remedy."
Sir Mervyn said times remained "challenging" for the UK economy, and there remained a number of factors that were completely unpredictable.
As well as the chance of a eurozone breakup, for which he said contingency plans were being prepared - although he would not be drawn on detail, there were other potential political flashpoints.
"Disruptions to the supply of oil, for example from Iran or Nigeria, could pose an upside risk to the inflation outlook," he said.