The Bank of England today warned that Britain's recession was far from over, with unemployment bound to get worse before it gets better.

Governor Mervyn King, delivering his Quarterly Inflation Report, warned that, even as the country emerges from the economic crisis, it will still be painful: "Unemployment is high and, for the forseeable future, rising," he said. Overall, the economy was set to show a "slow recovery" but the timing and magnitude of that was "highly uncertain".

Given the continued weakness of the economy, King said it was likely that inflation would slow below 1% this year and stay below the Bank's main 2% goal until at least the end of 2012. That was interpreted by economists as meaning that the Bank's Monetary Policy Committee would not be raising interest rates any time soon.

The CEBR research consultancy predicted it probably also meant the Bank would inject a further £50 billion into the economy through its quantitative easing policy.

King warned that, even when the economy started to show growth rising, it would still only be from a very low base level. "The big message today is: it's levels, stupid - not growth rates - that matter here. As far as most people and most companies are concerned, the recession will not feel like it's over for a long time, despite any signs of growth."

King said the recession was suffering the impact from the weak banking sector which had to get the strength of its balance sheets back up.

"It's not terribly desirable to see the contraction in lending that's currently going on," he said.

"The banking sector is still in a very bad way and it's going to take a while to get it in a position again to lend normally."

The increase in economic output likely in the coming months will come largely from companies' need to rebuild stocks after running down their inventories to the bare bones during the recession.

The doveish tone of the report led to a rise in the Footsie 100 as expectations of an interest rate rise dwindled.