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Bank of England dampens hope for swift economic recovery

In a bitter blow to Alistair Darling's ever optimistic forecasts for the UK economy the Bank of England has today revealed a sharp re-adjustment in economic forecast for the short to medium term. Alongside a suggestion that the UK economy is still struggling to pull out of its downward spiral Mervyn King, the Gov of the Bank of England, has confirmed that in his opinion any recovery would be "relatively slow and protracted".

However, it is the bank's downgrading of the short to medium term performance of the UK economy which has caught the attention of many investors and economist. Only three months ago the Bank of England had been suggesting the UK economy would shrink by 3% in 2009 although this has now been revised to 4.5%. When compared to Alistair Darling's forecast only a few days ago, of a 3.5% reduction in the UK economy for 2009, it would appear that the Chancellor is a little out of touch.

While 2010 is perhaps not as bad as expected, with the UK government expecting a 1.25% growth rate against a 1% forecast from the Bank of England, this will still have a significant impact upon government tax income. It would also indicate a larger than expected budget deficit in 2009 and 2010 and ever-increasing national debt.

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