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."
More top news
It will be a frosty Christmas morning across the UK but any chance of snow is limited to the Scottish mountains.
Fainting dogs, dancing grooms and an attacker who picked on the wrong girl all featured highly in our most-read stories of the year.
Some dogs have been at the Battersea Dogs and Cats Home for more than a year. Can you make their Christmas and give them a new home?