Bank of England expected to cut UK growth forecasts

The Bank Of England is expected to cut growth forecasts close to zero from the 0.8% predicted in May as the double-dip recession intensifies.

The quarterly inflation report is likely to indicate no growth for 2012 compared with 2% predicted a year ago.
Governor Sir Mervyn King is expected to be asked about a possible interest rate cut from the current record 0.5%.
Presenting his last report in May, he said the UK would not be "unscathed" by the eurozone "storm".
The UK recession deepened between April and June, with output falling by 0.7%, official data released at the end of July showed.
The Office for National Statistics said the bigger-than-expected contraction, which followed a 0.3% drop in the first three months of the year, was largely due to a sharp slowdown in the construction sector.
BBC economics editor Stephanie Flanders said many in the City would be bracing themselves for bad news on Wednesday morning when they opened the Bank's latest quarterly report.
She said that, when it drew up its last forecasts, it was expecting the economy to do poorly in the first half of the year - but not shrink by more than 1%.
And the Bank thought the UK economy would get bigger, not smaller, over the course of 2012 but that now looked increasingly unlikely, she added.
Funding for Lending The Monetary Policy Committee has continued its programme of quantitative easing (QE) in which it pumps fresh money into the banking system to try to boost lending and thus the wider economy.
In July, it injected a further £50bn into the system, taking the total value of the Bank's QE programme up to £375bn.
The Bank and the Treasury have also launched launched a new scheme to increase lending to households and companies.
Under the Funding for Lending initiative, the Bank of England is initially expected to lend about £80bn at below-market rates to banks and building societies.
The BBC's economics editor said that, if the quarterly inflation report showed the Bank expecting much lower growth and inflation even with this extra help, the City would be betting on more action to support the economy by November.
This could include a cut in interest rates to another all-time low, she added.
Meanwhile, eurozone speculation is currently focused on Spain, which has already secured a 100bn-euro rescue deal for its banks.
It is feared that if Spain's government is cut off by the markets and has to seek a full-blown bailout, Italy may follow not far behind which would exhaust the eurozone's current bailout capacity.

Posted in: business