Bank of England governor Mervyn King says the UK economy is showing signs of a recovery but progress will be slow as the impact of the eurozone sovereign debt crisis continues to bite.
In an extended live interview with Channel 4 News last night, King says the Bank did not “have a crystal ball at any point” when predicting UK growth.
He says: “I think we are beginning now to see a few signs of a slow recovery, but it will be a slow recovery. After a banking crisis, one cannot expect to get back to normal and I fear it will take a long time.
“It will depend on critically what happens in the euro area and the rest of the world. The [United] States is struggling a bit, Brazil and China are slowing.
“I think our fate in terms of speed in which we come out of the state we are in very much depends on what happens in the rest of the world.”
However, King says he expects growth to rise during the next quarter of the year.
The outgoing Bank of England governor says he had not expected the sharp rise in food and energy prices or an escalation in the European sovereign debt prices.
He says the food and energy price rise has pushed up inflation, while the European crisis has reduced demand for UK exports.