LONDON, August 13, 2008 (AFP) – The head of the Bank of England forecast on Wednesday that Britain faced increased risk of recession with economic growth set to slow further and inflation expected to spike. “It is bound to be the case there will be a quarter or two of negative growth,” BoE governor Mervyn King told a press conference here.
King spoke soon after the central bank’s Monetary Policy Committee said in its latest quarterly Inflation Report that Britain’s economy would be “broadly flat” over the next year, before rebounding quickly from the middle of 2009.
The technical definition of a recession is when an economy contracts for two or more quarters in a row.
Gross domestic product (GDP) in Britain grew by 0.2 percent in the second quarter compared with the first three months of 2008, according to recent official data.
This was the slowest pace of economic growth for more than three years.
“The Committee’s forecasts for GDP growth now envisage the economy broadly stagnating over the next year or so,” noted Capital Economics analyst Jonathan Loynes.
“However, there is a clear chance that the economy slows even more sharply than this. Business surveys are alrea