The Governor of the Bank of England has predicted that the UK will avoid a double-dip recession.

Mervyn King said today (10 November) that he does not think that the UK will slide back into recession. The UK economy grew by 0.8% in the third quarter of 2010, although momentum is set to slow.

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While King’s forecast will buoy retailers and consumer products companies, including drinks firms, King echoed other experts in predicting higher living costs over the next year.

Government cut-backs and ongoing tough economic conditions have begun to eat into consumer spending power in the UK. All respondents to a Markit Economics survey in September said that they expected the cost of living to rise in the UK in the coming 12 months. The Government plans to raise value added tax from 17.5% to 20% in January 2011.

King warned today that inflation is likely to be high in the short-term. He added that the world economy continues to face “difficult and uncertain times”.

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