THE Bank of England is making preparations to support UK banks in the event of a break-up of the eurozone, deputy governor Charlie Bean has confirmed, describing the present state of the single currency area as a “worrying situation“.

Bean said that the Bank has recently introduced a temporary loan facility as a precaution, for use in the event of contagion from the eurozone crisis endangering British institutions.

The deputy governor predicted “pretty flat“ economic conditions in the UK over the next six months, and did not rule out a double-dip recession. But he forecast that a sharp decline in inflation would see spending and growth begin to rise again by the time of the Olympics in the summer.

He did not rule out a further round of quantitative easing at the time of the Bank’s Monetary Policy Committee meeting in February.