Bank of England forecasts for the British economy are 1.7% growth rate and 5% inflation rate for 2011.
Mervyn King Governor of the Bank says the short-term outlook for Britain has deteriorated since February. Higher utility bills were likely to drive the consumer prices index (CPI) up to 5% this year and are likely to remain above the government’s target figure until the end of 2012.
The Report, published on the first anniversary of the formation of the UK coalition government, warned that its fiscal consolidation will continue to hinder economic growth over the next two years. Angela Eagle Labour shadow chief secretary to the Treasury said
"This latest downgrade of the growth forecast from the Bank of England follows three downgrades by the Office for Budget Responsibility. A year ago the OBR was predicting growth of 2.6% under Labour's plans, something which now looks like an impossible prospect….As the governor rightly noted, the UK economy is still 4% below the level it was at before the global financial crisis, while GDP in the US has now surpassed its pre-crisis peak."