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Page last updated at 08:39 GMT, Wednesday, 26 January 2011

UK economic recovery 'fragile'


The governor of the Bank of England, Sir Mervyn King, has warned of rising inflation and falling wages as figures show a 0.5% contraction in GDP in the last quarter.

Paul Kenny, General Secretary of the GMB union, said that his remarks "didn't go down well" with working families.

"I do find it a bit rich that banking officials are telling the rest of us we have to take pay cuts," he said.

And he added that the government's economic strategy was a "gamble" and that "there is a growing level of concern that there is no light at the end of the tunnel".

But former chancellor Lord Lamont urged people not to listen to Mr Kenny.

"If unions press for excessive wages in these conditions, the result will unfortunately be that jobs are lost," he said.

The figures showed that the economic recovery was "choppy" and "fragile... therefore we can't expect very fast growth in the near future".

"We have come to the end of the illusion of debt fuelled growth," he added.

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