UK growth forecasts slashed by Bank of England

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The Bank of England has downgraded its outlook for UK growth from 1.8% to around 1.4% following a weakening of the UK economy since May.

The report was compiled before the recent events involving Spain, Italy and the US and there are concerns that things could be much worse.

The report also suggested that inflation could rise to 5% and warned that an increase in interest rates may do nothing about it.  The UK economy is now so vulnerable that the crisis in the Eurozone and the US could see a double dip recession.

Scottish government Finance Secretary John Swinney said:

“This is further evidence that the UK Government needs to take action, now, to boost growth. The UK Government has already recognised that it needs to do more to support the recovery, and the Chancellor now needs to act.

“The most effective way to do that is to improve consumer and business confidence and focus on job creation through targeted capital investment. We have put forward a range of specific policies to help boost growth, such as a cost effective programme of infrastructure investment to create new jobs and new capital assets which will support growth over the short and long term.”

Mr Swinney added:

“What Scotland really needs is access to all the key levers of economic growth, such as borrowing powers and corporation tax, to enhance investment and create more jobs across the Scottish economy.”