Financial Advice UK - UK economy News - Sir John Gieve Predicts Doom And Gloom For The UK

City analysts today warned the government that the British economy is set to witness a recession which could last up to 18 months. Capital Economics predicts that the gross domestic product for the...
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UK economy News - Last Updated Friday 18th July 2008

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Sir John Gieve Predicts Doom And Gloom For The UK

Friday 18th July 2008

When the deputy governor of the Bank of England starts talking about not being able to rule out a recession in the UK, it really is time to consider the worst. After months of trying to avoid the question it seems as though Sir John Gieve and his colleagues at the Bank of England are resigned to the fact the UK will formally move into recession in the short term.

However, more worrying was the admission that the recent jump in inflation even took the Bank by surprise and was not part of their ongoing financial calculations. As the rate of inflation nears 4% (double the Bank’s target of 2%) the Bank has suggested that the rate it likely to rise to more than 4% in the short term and stay there for some time. Normally in a situation like this the Bank would look to increase interest rates to stem the flow of cheap credit but with the economy on the edge of a large fall this is just not possible.

Elements such as the rising cost of energy and other factors out of the control of the government and the Bank are primarily to blame, but if only Gordon Brown had stored some cash away from the good times we may not be in the serious mess the UK economy is in at the moment.