The current economic downturn could be as bad as the crash seen in the 1970s, with no imminent end in sight, the new deputy governor of the Bank of England has warned.

Speaking at the annual conference of the world's central bankers in Wyoming, Charlie Bean described the current mood among business leaders as one of "considerable caution", playing down hopes that the worst is now over.

He explained that, while consumer sentiment has picked up on several occasions, each time "another grenade" has exploded in the world's financial markets, setting recovery back even further, the BBC reported.

"We've got our fingers crossed that things will improve. But there is the recognition that there is still a long way to go yet," he said.

However, on a more positive note, Mr Bean stated that, should rising inflation be arrested and even reversed and oil prices remain steady, the credit markets could stabalise within the coming year.

The comments come just a fortnight after the Bank's governor Mervyn King warned that falling levels of household income and high inflation meant that the UK economy is currently facing a "difficult and painful period".