European Comission cuts UK growth forecast

By Angela Monaghan and Bruno Waterfield Published: 7:42PM GMT twenty-five February 2010

The EC right away expects the UK economy to grow by only 0.6pc in 2010, compared with the 0.9pc expansion it likely in an progressing forecast. It pronounced expansion would be hold behind by a one after another debility in made at home demand.

The foresee is neatly reduce than the 1.25pc expansion likely by the Chancellor in the pre-Budget report. The EC expects the eurozone to grow by 0.7pc this year.

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Olli Rehn, the mercantile and financial affairs commissioner, pronounced the key plea for the UK was a converging of the open finances. "Failing to grasp this would positively bushel middle or prolonged tenure genius for mercantile expansion in the UK," he said.

The EC additionally lifted the foresee for UK acceleration to 2.4pc for 2010, up from 1.4pc. It likely acceleration would rise in the initial entertain at 3.3pc.

Separately David Miles, part of of the Bank of England"s Monetary Policy Committee, insisted in a debate that the Bank"s �200bn quantitative easing programme was not indispensably inflationary given the batch of purchases could be changed up or down as required to encounter the 2pc target.

Underlining the frail state of the British economy, the Office for National Statistics pronounced on Thursday that commercial operation investment fell by 5.8pc in the fourth entertain of 2009, imprinting a 27pc tumble given the commencement of the crisis. Allan Monks, economist at JP Morgan, described the dump as "an pure disaster."