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Economy doomed for a while to come

Wednesday August 11th 2010

Recovery from recession in the UK is still somewhere off in the distance, according to the Bank of England's assertion that any growth witnessed recently is slowing and that the cost of living is still rising.

GDP registered a 1.1% increase for April-June but this will not continue, bank governor Mervyn King pointed out.

Forecasts have been revised downwards. The bank said in May that this year will see growth of 1.5% and next year will be 3.4% but the Office for Budget Responsibility said in June that any growth would only be 1.2% for 2010 and 2.3% for 2011.

Rising inflation will accelerate once January 2011's VAT increase to 20% comes into play and the potential for growth is being killed by the massive cuts being pushed through by the Tory-Lib Dem Government. The public sector cuts amount to taking £113 billion from taxpayers by 2014-15.

Banks will also prove a block to growth, the bank governor added.

Copyright © Press Association 2010

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