Bank chief warns of 'choppy recovery'

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The UK is being warned of slower growth and stickier than expected inflation.

Bank of England governor Mervyn King has said the British economy will see a "choppy recovery" after the recession.

The latest forecasts come as Chancellor George Osborne's emergency Budget kicks in.

The Bank says growth will be slower next year that previously thought.

The report also say inflation is likely to stay above 2 per cent until the end of 2011 due to January's VAT hike.

Households are being warned they could be squeezed by tighter credit conditions as banks repair their balance sheets.

The latest gloom comes after recent surveys showed a sharp slowdown in high street sales, falling house prices and consumer confidence at its lowest for more than a year.

The Bank's monetary policy committee has already slashed interest rates to a record low of 0.5 per cent and pumped £200 billion into the money supply, but its latest inflation forecasts signal that further action could be on the way.

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