The Bank of England’s central forecast, produced yesterday, has predicted a grim outlook for the UK economy. For the first time since 2005 the Bank of England’s predictions are significantly lower than that of the Treasury.

The Treasury forecast, produced in March, expects growth of 2.25-2.75 per cent in 2009 and 2.5-3 per cent growth in 2010. This is in contrast to the figures produced by the Bank which show growth to slip from 3.3 per cent in 2007 to 1.5 per cent in 2009.

Despite the warnings from the Bank, the Government remain steadfastly optimistic, the Chancellor saying that he still believes the British economy to be resilient.

The news from the BOE comes after predictions that the housing market is in a downturn, and oil and food prices are on the rise.

Lucy Trueick