Bank of England Governor Mervyn King says UK economy is in 'deep' recession

The Bank of England Governor Mervyn King has warned that the UK is in 'deep' recession and delivered its clearest signal that it will move beyond cutting interest rates to help revive the economy.

The risks to the economy remain "heavily weighted to the downside," the Bank of England said today in is its gloomiest assessment so far. The speed of deterioration is accelerating, the Bank said in its latest Quarterly Inflation Report, and the economy may shrink by 4pc by the middle of this year. Inflation will drop to 0.5pc at the end of next year, it added.

Governor King also gave a sharp signal that interest rates are heading below 1pc as the Bank steps up efforts to prevent what's already the deepest recession since the early 1980s turning into something worse. The news drove sterling almost two cents lower against the dollar to $1.44, and put it on the back foot against the euro.

The report provides "strong support for our view that rates are heading to zero or very close," said Jonathan Loynes, an economist at the Capital Economics.

Today's assessment comes as the barrage of bad news from most parts of the economy continues. Unemployment reached nearly two million, its highest level for almost 12 years, in January, figures earlier today showed. That comes on top of confirmation last month that the recession is officially the worse since 1980.

The Bank insisted that the weakness in sterling - its down 28pc against the dollar since the start of 2008 - will eventually help pull the economy out of recession. However, Hetha Metal, an economist at the Ernst & Young ITEM Club, doubts the pound will make a powerful impact because overseas demand for British goods will remain weak.

Governor King and the rest of the Monetary Policy Committee have so far reacted to the downturn by aggressively cutting interest rates, the speed of which increased after the collapse of Lehman Brothers in October deepened the crisis and its fall-out on the wider economy.

The Bank today also signaled it will take measures to inject more money into the economy as earlier moves to make money cheaper become redundant. These measures include buying assets such as corporate and Government bonds.

Brad Pitt and Angelina Jolie snub London's posh restaurants for a pre-Bafta curry

Brad Pitt and Angelina Jolie shunned the Michelin-starred restaurants of London in favour of a local curry house for a pre-Bafta meal, it has emerged. The glamorous Hollywood couple arrived at the Dorchester hotel on Park Lane on Saturday, but opted not to eat in the Alain Ducasse restaurant where meals are around £100.

Instead they went to the Noor Jahan, an Indian restaurant in South Kensington where diners can expect to pay just £20 a head.

Shauyab Ahmed, part-owner of the restaurant, said: "They booked a table for 12 at 7.30pm and were a bit late arriving, but that was OK.

"The other customers loved it and were very happy to see them."

And the Bafta-nominated actors were not the only two famous faces around the table that night.

They were joined by former supermodel Claudia Schiffer and her film director husband Matthew Vaughn, as well as actor Robert Downey Junior.

The party dined on a feast of vegetable samosas, tandoori lamb chops and the house special, lamb passanda – a favourite dish of Vaughn's, who recommended the 40-seat restaurant.

Brad Pitt and Angelina Jolie snub London's posh restaurants for a pre-Bafta curry

Brad Pitt and Angelina Jolie shunned the Michelin-starred restaurants of London in favour of a local curry house for a pre-Bafta meal, it has emerged. The glamorous Hollywood couple arrived at the Dorchester hotel on Park Lane on Saturday, but opted not to eat in the Alain Ducasse restaurant where meals are around £100.

Instead they went to the Noor Jahan, an Indian restaurant in South Kensington where diners can expect to pay just £20 a head.

Shauyab Ahmed, part-owner of the restaurant, said: "They booked a table for 12 at 7.30pm and were a bit late arriving, but that was OK.

"The other customers loved it and were very happy to see them."

And the Bafta-nominated actors were not the only two famous faces around the table that night.

They were joined by former supermodel Claudia Schiffer and her film director husband Matthew Vaughn, as well as actor Robert Downey Junior.

The party dined on a feast of vegetable samosas, tandoori lamb chops and the house special, lamb passanda – a favourite dish of Vaughn's, who recommended the 40-seat restaurant.

O2 arena put up for sale for £35m

London's O2 entertainment arena has been formally put up for sale by its landlords, sparking a race to control one of the world's most recognisable landmarks. Meridian Delta Dome Limited (MDDL), a joint venture between the property companies Quintain Estates and Development and Lend Lease, has had a £35m price-tag placed on it, which includes the virtual freehold to the arena itself and its surrounding leisure space.

Savills and Michael Elliott, the property agents, have been appointed to market the site. Initial offers are due this week. According to a sale document sent to potential buyers of the O2, the maximum annual rent for the arena is just under £1.6m.

Anschutz Entertainment Group (AEG) owns the long-term lease on the O2 Arena and surrounding leisure space.

"This is the bargain of the century," said one source close to the sale process.

Since its conversion into a music and sports arena by AEG the O2 has become the world's most popular entertainment venue, attracting some of the most famous acts in the music industry, including Kylie Minogue (left) and Snow Patrol. In 2012 it will host the Olympics gymnastics and basketball finals.