By Jason Theodorou
Bank of England governor Mervyn King has told MPs that the UK should not expect a fast economic recovery, despite recent growth. Mr. King told the Treasury Select Committee that a 1.1% output rise between April and June was 'encouraging', but it remained to be seen if the recovery in output and employment would be consistent.
The Bank's governor said that he was concerned at the difficulty faced by small businesses in securing loans from banks, saying we would 'have effect that we really will notice for years to come' if the problem is not rectified. But he said that it was a problem to be solved by the Government, rather than the Bank.
Mr. King said that there was a 'considerable distance to travel' before interest rates returned to standard levels, increasing from their current record low of 0.5%. He said that inflation would remain at a high level in 2011, with bMonetary Policy Committee (MPC) member Andrew Sentance's attempts to limit inflation not being fully adopted by his colleagues.
Mr. King said that Chancellor George Osborne's emergency Budget had not 'made a significant difference' to the economy that is likely to result in a double-dip recession.