The “biggest global financial crisis in history” may leave the UK economy with a weaker potential for growth, higher inflation, more persistent unemployment and lower living standards, a senior Bank of England official has warned.

Paul Fisher, the Bank’s executive director for markets and a member of the MPC, said that although there had been improving signs, the second quarter of this year was still likely to show a contraction in output and that annual growth would return to annual growth only in the next year or so.