Bank of England (BoE) governor Mark Carney says the UK’s economic recovery is neither ‘balanced nor sustainable’ and that household spending is the main reason for recent faster growth.

Speaking at the launch of the BoE’s Inflation Report, Mr Carney also said he would tweak the Bank’s policy of ‘forward guidance’, saying that unemployment levels would no longer trigger an upward revision in interest rates.

“The recovery is neither balanced nor sustainable,” said Mr Carney.

“A few quarters of above trend growth driven by household spending are a good start but they aren't sufficient for sustained momentum.”

The message was widely seen as a gesture to quell fears of imminent rate-hikes and business leaders took the news well.

“The Bank’s new guidance will give businesses further peace of mind that interest rates will stay low for some time, until investment and incomes are growing at sustainable rates,” said Katja Hall at the CBI.

“And the Bank has made clear that even when the economy is operating at more normal levels, rates will only increase gradually.”