The governor of the Bank of England, Mervyn King, has warned that economic growth in the UK is likely to slow and inflation could rise.

A combination of the global credit crunch and rising energy and food prices had made the outlook uncomfortable, he warned the Treasury Select Committee.

“The most likely outcome is for output growth to slow and inflation to rise at least for a period,” he said.

He also warned the current disruption in financial markets could have a knock-on effect on consumer spending as banks begin to restrict access to credit.

“With borrowing more expensive and less easily available, the personal savings rate is likely to rise, leading to slower growth of consumer spending,” he said.