Bank of England shows cautious optimism on economic outlook

Feb 15, 2012, 13:06 GMT

London - The Bank of England (BoE) Wednesday predicted a mixed outlook for the economy in 2012 but said that Britain was 'likely to avoid recession.'

In its quarterly inflation report, the central bank predicts a gradual economic recovery with growth of 1 per cent this year and 1.8 per cent in 2013.

Although the extent of growth pick-up remained uncertain, recent industry surveys had pointed to renewed economic growth, said central bank governor Mervyn King.

However, future developments remained largely dependant on a successful solution to the eurozone crisis, he added.

King said the bank was taking 'some reassurance' from falling inflation figures. He predicted that inflation, which fell to 3.6 per cent last month, would drop to 2 per cent by the end of 2012.

Unemployment figures published Wednesday showed a rise of just 0.1 per cent in the jobless total in the last quarter of 2011, to 2.67 million, or 8.4 per cent of the workforce.

The government said the figures showed that the labour market was 'stabilizing' despite continuing economic challenges.