LONDON, Aug. 14 (UPI) -- The governor of the Bank of England said there were signs the British economy could fall into a recession by the end of the year.
"There is a possibility of a quarter or two of negative growth," said bank Gov. Mervyn King, The Times of London reported Thursday.
"The next year will be a difficult one, with inflation high and output broadly flat," King said.
The British economy is reeling from falling house values and a government report this week said 20,100 jobs had been lost in July, pushing the unemployment rate to 5.4 percent.
King said inflation could hit 5 percent during the year. Slow growth and high inflation together describes a condition known as "stagflation," The Times reported.
The country's current credit crunch was "the biggest financial dislocation since the second world war," King said.
The bank's forecast the economy would grow 1.5 percent this year, and fall to a 0.75 percent in 2009. But, there are risks the economy could slow further, The Times reported.
