PEOPLE should enjoy the economic good times while they can because they may not last, Bank of England Governor Sir Eddie George warned yesterday.

Although he said the picture was still quite promising for the UK economy, a worse than expected downturn in the US could have a serious effect on the UK..

Sir Eddie refused to confirm whether interest rates were set to fall, telling BBC Radio 4's Today programme they might even have to rise further.

He said: "We've had a good run, enjoy it while it lasts because you cannot always expect it to be as good as it's been."

Sir Eddie said: "We've had a very good period. We've seen stable growth now for quite a long period, we've seen employment rising and unemployment coming down and we've seen growth accompanied by reasonable price stability."

The recovery in the euro exchange rate was beginning to ease the difficulties of agriculture and manufacturing, he said, but another cloud was appearing across the Atlantic in the form of a sharper slowdown than expected in the US economy.

"The latest data suggests it may be sharper than we needed and sharper than is desirable for the world's economy.

"That's one of the biggest uncertainties affecting the UK economy but it's not a nightmare scenario."

Overall growth rates should be sustainable at around the present level, he added. But he warned that private-sector demand would have to be moderated to meet public sector expectations.

The recovery of the euro against the pound had not yet gone far enough to make joining the single currency an immediate possibility in the future, he added.

Sir Eddie said people had misunderstood his alleged fall-out with Chancellor Gordon Brown over the removal of banking supervision from the Bank of England to the Financial Services Authority.

He was in favour of the change, he said, but was "upset" at the short notice he was given to warn staff of possible job cuts, an episode now in "deep history".

Shadow Chief Secretary to the Treasury Oliver Letwin said Sir Eddie's call for private sector moderation was effectively a warning that Chancellor Gordon Brown's spending plans would affect what individuals could do.

Turning Labour's "boom and bust" criticisms of the Conservatives back on the Government, he said the "huge" rate of public spending would create expectations that the cash would keep coming.

The Tories had created today's economic stability with its "low-tax, low-regulation" economy and Labour's reversal of that policy would harm the nation's finances, he said