King warns on inflation and construction slowdown
10 Nov 10
But double dip remains unlikely, says bank governor
Bank of England governor Mervyn King has sounded a note of caution over the prospects of continuing economic recovery, warning the UK’s fortunes will depend heavily on the global economy.
Launching the Bank’s quarterly inflation report, king cited rising raw material prices and the forthcoming VAT hike as contributing to at least another two years of high inflation. He also cautioned that public spending cuts may hamper the resurgence in the construction industry, which underpinned growth in the second and third quarters of 2010.
Despite this, King, who has publicly defended the Government’s controversial programme of cuts, said a sharp slowdown in the recovery, or even a double dip, remained unlikely.