THE Bank of England is making preparations to support UK banks in the event of a break-up of the eurozone, deputy governor Charlie Bean confirmed.
Mr Bean described the present state of the single currency area as a “worrying situation”.
He said the Bank has introduced a temporary loan facility as a precaution, for use in the event of contagion from the eurozone crisis endangering British institutions.
The deputy governor predicted “pretty flat” economic conditions in the UK over the next six months and did not rule out a “double-dip” recession – but he said a sharp decline in inflation would see spending and growth begin to rise again by the time of the Olympics in the summer.
He did not rule out a further round of quantitative easing during the early part of 2012.