The Bank of England has slashed the UK 's growth forecast to zero, as the economy slips further into recession.
The forecast is down from 0.8% originally predicted in May, reflecting the dire state of the UK economy and dashing any hopes of a recovery.
The cut has also re-ignited speculation that base rate could reduce to either 0.25% or even zero over forthcoming weeks, although the Governor of the Bank of England, Sir Mervyn King, has played down such rumours.
Speaking in London, Sir Mervyn said: "The big picture is that output's been flat for two years. It's a saga that goes on, and on, and on. The idea that we have come to the end of it is unrealistic. There's still a long way to go.
"Another quarter point cut on bank rate is not going to be the difference between having a recovery and not having a recovery."
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