London - Stagnation in Europe is retarding Britain's economic recovery and delaying any lift in interest rates from their five-year low of 0.5%, the Bank of England said Wednesday.
The central bank predicted growth in the final three months of the year slowing to 0.8% from 0.9% in the previous quarter, partly because of shrinking exports.
The minutes of a rate-setting meeting said the "slight loss of momentum" had put paid to the prospects of an early interest rate rise.
Meagre output growth in the eurozone "had increased the risks to the durability of the UK expansion in the medium term."
The slowdown in exports "highlighted the risk that it might be difficult for the United Kingdom to grow much more quickly than its major trading partners for a prolonged period without a rising trade deficit," the banks said.
It warned that despite inflation being at a five-year low of 1.2%, a "premature tightening in monetary policy might leave the economy vulnerable to shocks."