On top of this morning's unemployment figures the Bank of England have now added to the general gloom and despair in the UK economy.
At the launch of the Bank's inflation report Governor Mervyn King said that the outlook for growth of the world economy has worsened since August and that in the UK activity could be broadly flat until around the middle of next year.
The Bank has downgraded its growth forecasts to 1 per cent both this year and next - down from 1.5 per cent and 2.2 per cent respectively.
On the bright side the Bank is confident that inflation will fall sharply at the start of next year as the contributions of VAT, energy and import prices decline.
The extent and pace of the fall, however, remain uncertain said the governor in his opening address.
A key uncertainty surrounding the outlook for inflation concerns the impact of the financial crisis on the level of potential output in the UK economy, and for how long any adverse impact might persist.
According to their figures,measured productivity is around 10 per cent lower than would have been the case had it risen on its pre-crisis
King added that External factors are providing an unwelcome drag on growth in our economy, adding to the headwinds that we already face in the process of rebalancing towards a sustainable path of recovery.
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