Bank of England Governor Mervyn King said Tuesday that the British economy will likely return to growth in the second half of this year, but warned that gains would be modest and that the path to a sustained recovery is far from clear.

King said that sharp falls in output in the global economy have largely come to an end, and that business and consumer confidence have improved somewhat. Improvements in financial markets should in time ease lending conditions to households and businesses, he added, in comments that will be closely scrutinized by economists for clues about the central bank’s intentions for its asset purchasing program to boost the money supply.

These developments are encouraging, but they need to be seen in context, and we should be under no illusion that the path to a sustained recovery will be smooth and painless. “Output is still well below and unemployment well above their levels of a year ago, and are likely to remain so for some time,” he added.

King’s comments come ahead of Friday’s eagerly awaited figures on gross domestic product, which economists believe may show modest expansion. The British economy officially entered recession at the turn of the year following two quarters of negative economic growth - the widely accepted definition of a technical recession - in the second half of 2008.

Economists had pegged gross domestic product to return to growth in the July to September quarter after a 0.6 percent contraction between April and June, but recent surveys on industrial production and business confidence have raised doubts.

Conflicting economic data in recent weeks has also left economists unsure of the Bank of England’s plans for its 175 billion pound so-called quantitative easing program. The central bank is tasked with keeping inflation at a 2 percent target. King said Tuesday that inflation will likely remain volatile over the coming year, but added that falls in spending will continue to pull down on inflation until spending recovers.