Unlike the Olympians- UK economy has not yet reached full fitness

This was the view of the Governor of the Bank of England yesterday as he slashed its growth projections to close to zero from about 0.8% predicted only in May.Unlike the Olympians- UK economy has not yet reached full fitnessThe disappointing figures published indicated no growth for 2012, compared with 2% forecasted a year ago.

This has led to calls for an interest rate cut, however Sir Mervyn King has revoked this possibility in the short term.

“Another quarter point on bank rate is not going to be the difference between having a recovery and not having a recovery.”

A rate cut would damage some financial institutions, such as building societies, and therefore would be “more counter-productive than beneficial”.

King went on to say that the Bank’s forecasts were unable to account for potentially severe knocks that could occur, most likely from the eurozone crisis.

“A black cloud of uncertainty is hanging over investment,” he said, adding that a strengthening pound decreases the competitiveness of British exports.

George Osborne admitted that economic growth was “disappointing”, but that the government had a chance to “give its 110% attention and effort and energy” to getting it moving.

Sterling performed remarkably despite the news rallying from below 1.26 against the single European currency reaching 1.2665 yesterday and today on the brink of 1.27.

It was similar story against the Greenback which is now trading up at 1.5650 from the 1.5565 (pre inflation report) yesterday.

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