BoE chief: UK economy 'still bumping along the bottom'

Bank of England Governor Mervyn King said today that the ailing UK economy continued to “bump along the bottom”, although he held out hopes for a “gradual recovery” in output.

His comments came as the Bank’s latest inflation report admitted that the UK’s crawl out of recession last year was weaker than hoped and lowered November forecasts for the pace of the recovery.

Today’s report predicts that inflation will spike at around 3.5% early this year – triggering another open letter to Chancellor Alistair Darling – before falling back below the Bank’s 2% target.