THE Bank of England has revealed interest rates are unlikely to rise until the middle of next year due to gloomier economic prospects.

Chief economist Andy Haldane said a hike could be pushed back until after next year's General Election.

He said the economic picture has worsened in recent months, meaning interest rates "could remain lower for longer".

He also said the UK economy was like "sunshine with showers", with strong growth, low inflation and soaring employment contrasting with a record six-year squeeze on real terms wages and flat-lining productivity.

Mr Haldane added: "The figures show an extended period of agony... virtually unprecedented going back to the late 1800s, with the exception of the aftermath of the World Wars and the early 1970s.

"Rather peculiarly, the UK economy appears to be writhing in both agony and ecstasy.

"This implies interest rates could remain lower for longer, certainly than I had expected three months ago, without endangering the inflation target."

His remarks come amid burgeoning fears about the health of the eurozone, with ultra-low inflation threatening to descend into a damaging deflationary spiral and the continent's biggest economy Germany apparently on the verge of recession.

Europe is also facing renewed political uncertainty over Greece, where an anti bail-out party has taken a poll lead, as well as the ongoing fall-out from the Ukraine crisis.

The International Monetary Fund has also downgraded growth prospects for the world economy.