Bank stokes economic fears with growth downgrade

The Bank of England will revise down its forecasts for growth in its inflation report this week stoking fears about Britain’s economic future, according to reports.

The quarterly report, due on Wednesday, is predicted to cut 1% from the growth forecasts the Bank made in May. Earlier this year it predicted 3.4% growth next year and 3.6% in 2012.

The new forecasts will fall in line with those set out by the Office of Budget Responsibility, which has predicted 2.3% growth next year and 2.8% the year after.

The report will also show that inflation will remain way above target for most of next year, following the VAT rise to 20% in January.

The Federal Reserve is expected to downgrade its outlook for the US economy, according to the Financial Times.

However, fears of a double-sip recession and poor economic data are unlikely to prompt the US into large pledges to stimulate the economy and it would take a few more months of poor data before another round of asset purchase is started.