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BoE to slash growth forecast to ‘zero’

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The Bank of England (BoE) is set to cut economic growth forecasts to almost 0% for this year, amid a deepening double dip recession.

Released later this morning, the quarterly inflation report is likely to predict no growth for 2012, according to the Telegraph.

In its May report, it had predicted growth of 0.8%, with governor Mervyn King claiming the UK would be “unscathed” by the eurozone “storm”.

However, the Bank is now expected to also downgrade growth forecasts for 2013 to around 1.5%, down from more than 2% in May.

King is also likely say inflation will fall below the 2% target by the end of the year, from its current level of 2.4%, due to falling oil and commodity prices and a faltering economy.

After its most recent meeting, the Bank’s Monetary Policy Committee voted to keep interest rates at 0.5% and quantitative easing at £375bn.

The UK economy shrank by 0.7% in the second quarter of the year, a far worse contraction than economists had forecast, extending the longest double-dip recession since the 1950s.

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