Bank raises economic growth forecast

The Bank of England (BoE) has upgraded its UK economic outlook and said that inflation is now weaker than originally predicted three months ago.

Output grew by 0.3 per cent in the first quarter of 2013, with the BoE saying growth is likely to strengthen over the course of the year.

In his last press conference as the Bank's Governor, Sir Mervyn King called it 'a welcome change in the economic outlook.'

Inflation is also expected to drop to its two per cent target within two years, compared to February's prediction of 2.3 per cent in the same period.

The news, however, did coincide with the announcement from the Office for National Statistics that unemployment in the UK had risen slightly in the first quarter of the year.

'Nevertheless, a recovery is in sight,' King said.

In the BoE's quarterly Inflation Report, the Governor said: "Today's projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago. That is the first time I have been able to say that since before the financial crisis."

The news came against ongoing problems in the eurozone, with France announcing it had fallen back into its second recession in four years. Across the wider 17 nation eurozone, the economy contracted by 0.2 per cent from January to March, with nine of its member countries now in recession, according to data from the European Commission's Eurostat.