Mervyn King has reduced the UK鈥檚 growth forecast for 2011 to 2.5%.

Mervyn King has slashed the Bank of England鈥檚 growth forecast for 2011and warned that banks will be reluctant to loan money for 鈥渕any years鈥�.

The Bank had forecast growth of 3.4% for 2011, but it has now reduced its forecast to 2.5%. It also said inflation will stay higher for longer than previously forecast.

Announcing the cut, Mervyn King, the governor of the Bank of England, warned that the UK economy faces a 鈥渃hoppy recovery鈥� over the next two years. He added that the reduced growth was partly due to a lack of bank lending.

King said: 鈥淚t will take many years before bank balance sheets and fiscal positions return to anything like normal. In the meantime they will act as headwinds to the recovery.鈥�