The UK economy is strong, declared Mervyn King, governor of the Bank of England. That statement will be tested in the next few months as the extent and speed of the spillover of the financial crisis feeds through to the real economy.

Mr King’s faith in the economy’s resilience was underlined this month when the Bank’s rate-setting monetary policy committee declined to follow the US Federal Reserve in cutting interest rates. It voted instead to maintain the Bank’s base rate at 5.75 per cent for the third consecutive month.