Bank of England's Sir Mervyn King says recovery in sight

The UK economy has "cause for optimism", the governor of the Bank of England has said.

Sir Mervyn King, presenting the Bank's latest Quarterly Inflation Report, 20 years after it issued its first one, said "a recovery is in sight", but warned that the economy will be weak in the short-term and inflation will remain stubbornly high for the next two years.

Sir Mervyn also said the outlook for inflation had worsened since November.

Stephanie Flanders reports.