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Mervyn King Fires The First Warning Shots of Recession

Mervyn King, the governor of the Bank of England has fired the first warning shots that the UK is heading for a recession. In a very honest assessment of the UK economy he suggested that the country is in a worse situation than at any time since the Second World War. However there was more doom and gloom to follow....

In line with the views of many experts in the City he has confirmed that inflation is set to exceed 5% over the coming months and because of this reason alone the chance of interest rate reductions is nil. The Bank and the Treasury have put inflation at the top of their list after which they will then move onto the economy.

Mr King also brought up the very awkward subject of unemployment and reiterated his belief that we are only just at the beginning of the unemployment cycle with thousands of workers set to lose their jobs over the next 12 months. This view was confirmed as the authorities released the latest employment data which shows that 60,000 joined the dole queue in the three months to June 2008 taking the level up to 1.67 million. The rate of growth in unemployment is rising faster than it did during the last recession to hit the UK.

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