King delivers warning to G20

The Bank of England has said inflation will stay high next year, and the economy is likely to remain weak.

In its quarterly inflation outlook it blamed a combination of the rising price of raw materials, higher energy bills and the increase in VAT scheduled for next year.

Governor Mervyn King also had a warning for the G20 countries, who are preparing for this weekend's meeting in South Korea.

"We end up with a failure to recognise there is a collective interest to reach an agreement then every country will be worse off as the level of activity falls."

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