Bank chiefs are set to revise down their forecast for growth

The Bank of England publishes its quarterly inflation report on Wednesday.

The Bank’s Monetary Policy Committee (MPC) is expected to slash its forecasts for growth and inflation as a raft of key indicators all point towards the economy heading into reverse.

The economic outlook has been blackened by weak manufacturing, trade and services data, while the problems in the eurozone have taken a dramatic turn for the worse in recent weeks.

The Bank said the eurozone debt crisis was a key threat to the UK when it unleashed an additional £50bn in emergency support in October in a clear sign the recovery was heading towards the rocks. Bank governor Sir Mervyn King has warned that the country could be facing “the most serious financial crisis” that it has ever seen.

In its last quarterly report in August, the Bank forecast gross domestic product (GDP) to grow by around 1.5 per cent this year and 2.2 per cent in 2012. The report said inflation would fall back to around 1.7 per cent in mid-2013.

Alan Clarke, UK economist at Scotia Capital, said the Bank is likely to revise its growth forecasts sharply lower – but will remain slightly more optimistic than the City’s consensus 0.9 per cent growth for 2011 and 1.3 per cent for next year.

Mothercare’s future in the UK will be at the heart of its half-year results on Thursday, when it is expected to unveil a slide in profits.

The retailer, which has 353 UK stores and 969 overseas, recently issued a profits warning after it said UK like-for-like sales slumped 9.6 per cent in the 12 weeks to October 1.