England’s recession deepening

Bank of England (BOE) governor Mervyn King, has conceded that the UK is in a “deep recession” and indicated that the bank is likely to take further action to stimulate the economy.

The grave warnings came as the BOE released its Inflation Report, forecasting GDP to contract at an annual rate of 4% in 2009 – a starkly larger contraction than the 0.75 to 1.25 per cent forecast by the British government in only November 2008.

“The UK economy is in deep recession,” Mr King said.

"The projections ... imply that further easing in monetary policy may well be required.”

The BOE reduced its cash rate by 0.5 per cent to 1 per cent at its February meeting.