The Bank of England is predicting a slowdown in growth as both inflation and unemployment rise.
The sobering forecast said the bank is now expecting inflation to peak at 7.25% in April. In November it said the peak would be 5%.
Economic growth is expected to reach 3.75% this year, down from the 5% forecast in its quarterly report in November.
Unemployment, which the bank expects to drop to 3.8% in the first three months of this year, is forecast to go back up to 5% late this year as rising energy prices hit household budgets and suppress demand, reducing the need for as many workers.
