Bank of England Deputy Downbeat on Economy

UK economic growth will continue to feel the effects of the credit crisis over the next year, the new deputy governor of the Bank of England has predicted.

Charlie Bean cited recent increases to food and fuel costs, along with the continuing poor performance of global stock markets, as potential factors behind the slowdown.

Currently, the Treasury forecasts growth of two and 2.5 per cent for 2008 and 2009 - predictions which are seen as very optimistic by some analysts. The Organisation for Economic Co-operation and Development (OECD), for example, downgraded its predicted UK growth last month from two to 1.8 per cent for this year - and from 2.4 to 1.4 per cent in 2009.

Mr Bean's remarks were made as the wholesale price of oil hit another all-time high, rising on the New York exchange to almost $146 this morning. The FTSE 100 index, encompassing Britain's biggest employers, also registered a three-figure drop at close of trading yesterday - deepening the gloom.

The deputy governor commented: "[The UK is facing] the most challenging set of circumstances since at least the early 1990s and possibly earlier…as a nation, it means that our living standards will be lower than they would otherwise be. There is not very much that we can do about that as a nation unless we improve our [economic] productivity to offset it."