Mervyn King: economy remains 'uncertain'
Updated on 11 November 2009
The governor of the Bank of England says that the UK economy "has only just started along the road of recovery" after a shock fall in output in the last quarter.
In a grim forecast for Britain's economy King said repairing the damage of the recession would not be achieved "in a few quarters" after an "extremely painful" year for most global economies.
Launching the Bank's most important quarterly forecast, the Inflation report, the governor forecast that "bank lending will probably remain weak over the next three years".
In a downbeat forecast, Mr King said the strength of the recovery was highly uncertain and it was vital that action was taken to reduce the deficit in the government's finances.
Unemployment has increased to 2.46 million, although the rise was the smallest for 18 months, and the youth jobless rate has hit a record high.
Channel 4 News economics correspondent Faisal Islam said:
"Despite the fact the country is still in recession (a more prolonger recession than any other country), despite the unemployment figures showing record youth unemployment, the Bank of England's quarterly health check on the economy is showing some tentative signs of life.
"There is a key dilemma here.
"These moments in the economic cycle where you're seeing recovery being to start is often thought as the most dangerous part of any recovery - it was certainly the case in Japan 10 to 15 years ago.
"So there is a real dilemma for the Bank of England to signal when to withdraw the extraordinary stimulus - the £200bn worth of printing money, of purchasing assets.
"The message from the Bank of England today is, don’t worry about that - we're still pumping money into the economy and we'll need to because "the road ahead is long and hard"."
