The Bank of England Governor says that despite a resilient labour market, the economy has barely grown over the past two years.
Sir Mervyn King said: "The unexpected weakness reflects the impact of the euro area crisis and its effect on confidence and bank funding costs - and the sharp squeeze on real incomes from higher-than-expected world energy and food prices."
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Two teenagers have been arrested on suspicion of drugs offences following the death of a 17-year-old youth who collapsed at Leeds Festival.
Theresa May will gather Cabinet ministers together on Wednesday to discuss her plans for Brexit.