King set to give downbeat forecast of UK growth amid euro woes
BANK of England governor Mervyn King looks set to provide a gloomy outlook for Britain's economy when he presents the bank's quarterly forecasts tomorrow as the eurozone crisis rumbles on and signs mount of a looming recession.
The central bank is widely expected to slash the growth forecast of Ireland's leading export market for the coming year, and economists are keen to see how far the policymakers think inflation will come down -- key for assessing whether more quantitative easing is on the cards.
Mr King has already called the current turmoil the worst financial crisis since the Great Depression of the 1930s when he explained why the bank decided in early October to pump another £75bn (€87.5bn) into the economy.
Some of his fellow policymakers have already warned against the significant risk of a renewed recession.
The bank is due to publish its November quarterly inflation report tomorrow, followed by a news conference by Mr King, which will most certainly focus on the escalating euro crisis.
According to a Reuters poll, the bank is seen revising down its growth forecasts to an annual rate of 1.5pc in the final quarter of 2012 and to 2.2pc a year later, down from around 2pc and 2.7pc respectively in August.
The economy grew by 0.5pc in the third quarter. Since then, surveys have indicated that manufacturing is already contracting, unemployment keeps rising and retailers are continuing to suffer.
"The bank has been systematically over-optimistic on the GDP growth profile over the past couple of years, and it will undoubtedly be forced to revise down its 2012 forecast," said Peter Dixon at Commerzbank.
GDP is seen flat in the current quarter before growing a mere 0.1pc in early 2012, followed by 0.3pc growth in Q2, according to a Reuters poll. (Reuters)