Bank of England governor Sir Mervyn King has said the road to economic recovery in the UK will be long, arduous and uneven.

"After decades in which the stock of debt built up rapidly, there is a reappraisal," he was quoted saying in the speech.

Sir Mervyn said falling inflation and subdued wage growth nevertheless gave the financial institution more scope to act.

"There is scope for interest rates to keep low, and, if needed, for additional asset purchases," he added.

Official figures released the other day demonstrated that the individual Prices Index (CPI) measure of inflation in England fell to 4.2% in December, down from 4.8% in November.

Speaking working in Brighton, Sir Mervyn explained that low development in Great Britain economy has not been only due to inflation but additionally down to households tightening their belts as a result of worries about jobs and future income.

"Households overall have been net savers, as opposed to net borrowers, for every of history 36 months," he stated.

Global slowdown

Sir Mervyn said the united kingdom economy was operating in just a "global slowdown" and rebalancing the world economy, as well as the UK economy inside, "is not proving becoming a smooth process."

Separately the IMF released a written report on Tuesday which cut its growth forecast to the global economy in order to 3.25% in 2012, down from a young forecast of 4%.

The IMF described our planet's economy as "deeply in to the danger zone" because of risks from the euro zone.

The euro zone is scheduled for the "mild recession" in 2012, with GDP expected to shrink by 0.5%, compared with an earlier forecast associated with 1.1% growth, in line with the IMF report.

Rebalancing act

Sir Mervyn needed Great Britain to rebalance its economy to scale back its borrowing.

"The Britain is still borrowing through the relaxation around the globe. If, as being a nation, we have been to cut back that borrowing, we've got to export many import less," he was quoted saying.

He pointed on the undeniable fact that net exports have improved by two percentage points of GDP since 2007 as a indication of progress.

However next he said this became no less than partly due to a 25% fall in the value of the pound against other currencies.

Executive pay

On Monday, Business Secretary Vince Cable announced steps to curb high boardroom pay.

Sir Mervyn required companies to take into consideration carefully before awarding buy their executives, arguing it can easily undermine the foundation with the market economy.

"Those taking decisions on remuneration, within the financial sector and elsewhere, need to comprehend that a market economy rests not only on incentives, but on the acceptance that the distribution of rewards is fair," he stated.

"That a sense fairness underpins the resolve for a market economy."

Sir Mervyn also warned that excessive pay, particularly in firms that had received a government bailout would've far-reaching effects.

"The legitimacy of an market economy will in the end be challenged if rewards go disproportionately to some small elite, especially the one that benefited from the support of taxpayers."

Meanwhile, BBC Business editor Robert Peston reported which the Treasury department is putting pressure on the board of state-owned Royal Bank of Scotland (RBS) to relieve leader Stephen Hester's pay to less than 50 % in the £2m he was awarded recently.

The RBS remuneration committee meets to choose pay awards for the executives on Wednesday.