Inflation in the UK is at significant risk of pushing past 5% in the coming months, policymakers at the Bank of England warned today as surging oil prices triggered by violence in North Africa add pressure to the cost of living in the country.

Bank of England policymakers fear the shock decline in the UK economy at the end of last year may not have been temporary as consumers have continued to tighten their belts.

The Bank of England ended the year as it began today as it left its emergency support for the economy unchanged.

The Bank of England today chose not to follow US counterparts into another round of emergency measures to prop up the economic recovery.

The Bank of England is unlikely to follow the US in pumping further cash into the economy today, citing a recent run of positive data.

BRITAIN’S economy grew twice as fast as expected in the third quarter and ratings agency Standard and Poor’s lifted the threat of a credit downgrade, a boost for a government under fire over steep spending cuts.

The pound was at a six-month low against the euro today amid mounting expectations for the Bank of England to pump more money into the economy.

The London market fell into the red today in the face of deepening concerns over a European debt crisis, with the banking sector bearing the brunt of the pressure.

The Bank of England put protecting a fragile UK recovery ahead of inflation fears today as it left interest rates on hold at a record low of 0.5%.

The latest Bank of England rates meeting takes place this week amid growing signs of dissent after a shock vote by one policymaker to hike borrowing costs.

Worries over a double-dip recession caused by savage belt-tightening across major economies have given Bank of England rate-setter Adam Posen sleepless nights, he admitted today.

US TREASURY Secretary Henry Paulson was aiming a shot across Europe’s bow about currency intervention, rather than Japan’s, when he warned that he opposed any such bid to alter relative currency values.