Britain’s central bank lifted a bit of the gloom hanging over the economy yesterday, delivering a slightly improved outlook for inflation and growth for the first time since the financial crisis erupted.

Bank of England Governor Mervyn King, presiding over his last Quarterly Inflation Report before he hands the reins to Mark Carney, said the better figures did not mean the recovery was now secure.

“Today’s projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago. That’s the first time I’ve been able to say that since before the financial crisis,” King told reporters.

“But this is no time to be complacent. We must press on to ensure a recovery and to bring down unemployment.” Annual inflation, currently running at 2.8 per cent, is likely to fall back to around the bank’s 2.0 per cent target in two years’ time.

That was lower than a forecast of 2.3 per cent the Bank made in February.

Sterling rose 0.3 per cent against the dollar to hit $1.5272 and British Government bond prices extended losses after the cautiously improved forecasts.

A strengthening of sterling and a drop in oil prices have helped ease price pressures in recent weeks.

The bank said the economy was “likely to see a modest and sustained recovery over the next three years.” That represented a small upgrade from its assessment in February, when the bank said the recovery was likely to be “slow but sustained”.

In February, the central bank unsettled some in financial markets by predicting that inflation would not return to target until the first quarter of 2016.

Britain has been suffering its slowest economic recovery in decades, and the BoE forecast that GDP was more likely to remain below its pre-crisis level for another year or so.

Unemployment data yesterday underscored how weak Britain’s economy remains.

The number of jobless benefit claimants fell more than expected in April, but a wider international measure of joblessness rose and earnings excluding bonuses grew at their slowest pace since records began in 2001.