Charles Bean warns of hazardous times ahead

Britain has entered a "hazardous" period and inflation could be above target next year, Bank of England deputy governor Charles Bean said yesterday.

"I am not expecting inflation to be way above target, but just moderately above target," Bean said in an interview.

He said there was also a risk of a more "anaemic" recovery than the Bank of England had previously forecast.

"We are in an economy which is recovering from a very deep recession indeed, where there is still a substantial margin of spare capacity, where unemployment is elevated," Bean said.

He added that it was still unclear whether the economy was passing through a soft patch or had entered "a more durable slowing" as concerns grow in some quarters about the Treasury's spending cuts and tax rises.