A slowdown in the American economy should have only a limited direct impact on Britain because the UK is more dependent on export markets in the euro zone.

David Clementi, deputy governor of the Bank of England predicted a "soft landing" in the US, rather than the full-blown recession that some commentators are expecting after years of rampant growth.

He also hinted at the possibility of an interest-rate cut in the UK in the near future, noting that inflation was now well below the Government target and said that the next meeting of the Bank's Monetary Policy Committee would be "interesting".

Mr Clementi said senior bankers believed the US economy would continue to grow during 2001, while a steady performance in the euro area would keep global growth above its long-term average.

"Decisive" action by America's Federal Reserve in cutting interest rates had increased the likelihood of a soft landing and reduced the risk of market instability in the US and around the world.

He said: "The direction of some of the trends we have seen in the past few weeks is not unwelcome, in particular the stronger euro and weaker dollar and the reduction in oil prices, so a soft landing looks more likely as a result."

Conditions in the UK were "more robust" than in the US, said Mr Clementi, noting that consumer confidence levels were higher, household demand stronger and consumer credit levels less of a cause for concern.

He said: "Planned increases in Government spending was coupled with a strong outlook for public finances. The recent slow down in world demand, combined with signs of an easier labour market and inflation numbers, comfortably below target, will make the next meeting of the MPC interesting."