UK economy won't recover until 2015 - Bank of England

The UK economy won’t recover back to its pre-recession levels until 2015, says the Bank of England.

The UK is being hurt by ‘zombie’ companies – firms that are struggling and paying interest only on debt – as well as inflation eating away at household budgets.

Households are also struggling as they slowly pay off their debts, eroding consumer spending.

Growth hit 1% in the third quarter, but this will wear off as the Olympics boost thins out.

Governor Sir Mervyn King pointed to the eurozone as a big threat.

He said: “If the unfavourable world environment persists – and there is little sign of any change to the underlying problems in the Eurozone – it may be unreasonable to expect anything other than a slow and protracted recovery,” he said, predicting the economy will continue to “zigzag” as it has all year.”