Recession 'worse than first thought' 20 mins ago Bank of England Governor Mervyn King has admitted the recession has been deeper than expected and that he just does not know when the economy will recover. Mervyn King: Economy needs a period of healing He revised downwards the outlook for the economy in latest quarterly inflation forecast. He predicted a 4.5 per cent year-on-year decline at its lowest point - considerably worse than Chancellor Alistair Darling's Budget forecast last month of 3.5 per cent. Inflation - currently at 2.9 per cent - is also set to fall below the 2 per cent target and "more likely than not" to remain below it in the medium term, he added. Mr King said "the economy will eventually heal, but the process may be slow". He added that the timing and strength of economic recovery is "highly uncertain". In addition, Mr King said it was likely "the supply of credit will continue to be restricted for some while", adding that banks remain risk-averse and focused on bolstering capital ratios. The governor said there was great uncertainty about the outlook and judging the balance of the various factors in play on the UK economy was "extraordinarily difficult".