Bank Of England Chief Sees Up-down Economic Growth

Published February 15, 2012 11:18AM (EST)

LONDON (AP) — The governor of the Bank of England says that Britain's economy is likely to grow slowly this year in a "zigzag" pattern of quarterly gains and setbacks in output.

Introducing the Bank's latest quarterly Inflation Report, Mervyn King said Wednesday that spending cuts and tight credit conditions at home and the weakness of major trading partners abroad is holding back growth.

The Inflation Report forecast growth of 1 percent in 2012 and 1.8 percent in 2013.

King added that inflation, currently 3.6 percent, is likely to fall to the official 2 percent target by the end of the year, and be below target for much of the following two years.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

LONDON (AP) — Britain's unemployment rate edged up to 8.4 percent in the last quarter of 2011, official figures showed Wednesday, as 48,000 people lost their jobs compared with the previous three-month period.

The Office for National Statistics said the unemployment rate has not been higher since 1995. It rose from 8.3 percent in the three months through September and was unchanged from the three months through November.

Wages excluding bonuses were up 2 percent, compared with 1.9 percent in the three months through November. Total pay including bonuses was up 2 percent, unchanged from the previous report.

Pay has increased slowly during a period when inflation shot as high as 5.2 percent in September. The latest data show inflation has dropped to 3.6 percent, and some analysts think it might drop to around 1 percent by the end of the year.

"The latest figures show some encouraging signs of stability despite the challenging economic climate," said David Freud, the minister for welfare reform.

"However, we are not complacent. With more people in the labor market we know that competition for those jobs is tough and we will continue to make it our priority to find people work," Freud added.

Vicky Redwood, chief U.K. economist at Capital Economics, noted that total employment rose by 60,000 in the last quarter of the year but that just kept pace with the growth of the work force.

"We continue to expect unemployment to rise much further in response to the weakness in the wider economy," Redwood said.

Britain's economy shrank by 0.2 percent in the last quarter of 2011, according to the statistics agency's first estimate.

By Salon Staff

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