BoE's King says euro zone threatens slow UK recovery
LONDON (Reuters) - Britain's economy is recovering slowly, but much depends on the euro zone finding a way to put its problems behind it, and there is little sign that a return to normal economic conditions is close, Bank of England governor Mervyn King said on Thursday.
"I think the next quarter will probably be up. I think we're beginning to see a few signs now of a slow recovery, but it will be a slow recovery. After a banking crisis one can't expect to get back to normal and I fear it will take a long time," he said in a television interview for Channel 4 News.
King's language - in which he talked of the euro zone creating a "black cloud" hanging over business confidence in Britain and the United States - echoes that which he used in his last news conference in August.
"What it (British recovery) will depend on critically, I think, is what happens in the euro area and also the rest of the world," he said.
"The United States is struggling a bit, Brazil and China are slowing. I think our fate in terms of the speed at which we come out of the flat period we're in will depend very much on what happens in the rest of the world."
The BoE is midway through a four-month program of 50 billion pounds ($81 billion) of gilt purchases to boost demand in Britain's recession-hit economy, and most economists expect the BoE to approve a further 50 billion pounds in November, which would take total asset purchases to 425 billion pounds.
Minutes to September's meeting of the central bank's Monetary Policy Committee showed that one official already saw a good case for more stimulus, and that others thought it likely that more would be needed in due course.
King himself has regularly expressed a gloomy view of Britain's economy, and in June he found himself in a minority on the MPC voting for more asset purchases, before he was able to win over other committee members in July.
In August, he said there was no "urgent" need for more asset purchases, but warned that Britain's economy would continue to be buffeted by "storm clouds" rolling in from the euro zone. ($1 = 0.6173 British pounds)
(Reporting by David Milliken and Matt Falloon)
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