BoE cuts UK growth forecast on double-dip fears

The Bank of England has been forced to cut growth forecasts for the UK to 1% amid fears of a double-dip recession brought on by the eurozone crisis.

Just three months ago, the Bank of England governor said the economy would grow by 1.5% this year.

However, this week the Bank is expected to cut that figure to 1%, and issue a gloomy prognosis for next year, The Sunday Times reports.

In August, the Bank thought 2012 would bring a 2.1% upturn but forecasters now think that prediction will be cut to about 1%.

Official figures published on Wednesday are also expected to show the number of 16 to 24-year-olds out of work has passed the one million mark for the first time since records began in 1992. There is also expected to be a big rise in the headline unemployment rate.

In its last inflation report, the Bank said it believed the economy would now be growing at an annualised rate of about 2% but the current quarter is expected to show no growth at all.

This week's downward revision of official growth forecasts will be the eighth reduction in succession. Two years ago, the Bank predicted the economy would grow 4% this year.

Separate inflation figures to be published next week are expected to show the consumer prices index is flat at just over 5%, according to The Sunday Times.