Does Mervyn King know something we don't?

Yesterday's rather downbeat statement by Mervyn King, the governor of the Bank of England, has opened a new argument with regards to the future of the UK economy. There are concerns that Mervyn King is aware of bad news on the way with regards to the economy as he has in the past been fairly upbeat about the UK and the prospects for the future. So is this a veiled warning for UK investment markets?

The very fact that Mervyn King believes UK base rates will remain at 0.5% for the foreseeable future, despite the potential threat of inflation, is a major statement in itself. But when you also take into account the fact he believes that the 1.1% growth in the UK economy during the last three months is unlikely to be repeated then perhaps we have the makings of a difficult period ahead for the UK economy?

Mervyn King has become an expert at communicating coded messages to the UK investment arena without actually saying "the words". Whether the UK is on the verge of a double dip recession is another matter for debate but the truth is that the UK economy will struggle for the foreseeable future.