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
Cloud for many on Monday and the risk of freezing fog patches to the east which could take a while to clear.
Scarlett Moffatt has been crowned Queen of the Jungle in this year's I'm a Celebrity... Get Me Out Of Here!
Emily Middlemas has been kicked out in the X Factor semi-finals - leaving 5 After Midnight, Saara Aalto and Matt Terry through to the finals