Bank of England slashes economic growth forecast

UK growth cut from 2.9 per cent to 2.4 per cent

David Cameron's new government will be under pressure to keep the UK's economy on track (Getty Images)

The Bank of England has cut the amount that it expects the UK economy to grow this year to 2.4 per cent, down from a previous forecast of 2.9 per cent.

In its quarterly inflation report, the central bank trimmed its forecast for UK economic growth over the next three years and reinforced expectations for an first interest rate rise in around a year's time.

The fresh projections follow official data showing that growth slowed sharply to just 0.3% in the first quarter of the year, though many expect the reading to be revised once more data is available.

Still David Cameron's new government will be under pressure to keep the UK's economy on track.

The administration received some good news on that front earlier on Wednesday as separate data released earlier by the Office for National Statistics showed the unemployment rate fell to 5.5% between January and March, while wages rose 2.2% - their highest growth for nearly four years.

The central bank said it changed its growth estimates because interest rates are likely to increase faster than markets had previously expected, plus the effects of the stronger pound and the weaker outlook for house building and productivity.

The BoE is expecting rates to rise from their record-low 0.5% in the second quarter of next year - three months earlier than expected in February - and to average 0.9% in the last three months of 2016.

Under its current assumptions, the bank rate should rise to 1.4% by the mid-2018.