More money woes for Britain as growth forecasts are cut

BRITAIN'S money woes will continue as the economy will grind to a halt this year, the Bank of England has warned.

Eurozone troubles, tough austerity measures and tight lending conditions will continue to hit UK fortunes.

In its quarterly inflation report, the bank slashed its growth forecast for 2012 to around zero from 0.8 per cent in a report in May.

Money whizzes also now expect the economy to grow by just around 1.9 per cent in 2013, compared to 2.4 per cent in its last estimate.

The bleak outlook will increase the chances of further emergency support measures.

We could see record low interest rates are cut below 0.5 per cent and more money could be printed in a "quantitative easing" burst.

In a boost to borrowers, the Bank signalled that it did not expect interest rates to rise above 0.5 per cent until 2015.

Presenting the grim report, Bank of England governor Sir Mervyn King said: “The underlying picture is that output has been at best broadly flat over the past two years, and has continually disappointed of a recovery.”

Sir Mervyn warned that the UK was “navigating rough waters and storm clouds continue to roll in from the euro area”.

But he said the contraction in output over the last three quarters — signalling the longest double-dip recession since the 1950s — is probably not as weak as suggested.