Hugo Best: Bank warns of euro crisis 'storm'

Wednesday, May 16, 2012

16 May 2012 Last updated at 05:49 ET

Sir Mervyn King said the inflation rate would remain higher than first though

The Bank of England has cut its growth forecast for this year to 0.8% from 1.2%, saying the eurozone crisis is still the main threat to UK recovery.

The rate of inflation will not fall as quickly as previously thought, and will remain above the government's 2% target "for the next year or so".

Bank governor Sir Mervyn King warned that the euro area posed the greatest threat to the UK recovery.

He said there was a "risk of a storm heading our way from the Continent".

Hugo Best