Bank Of England suggests recession will be worst for decades
Sir John Gieve has been speaking in Manchester during the last few days regarding the UK economy and the immediate outlook for the country. He has given the strongest indication yet that UK interest rates will fall yet further amid speculation that 0% could well be attained in the short to medium term. On a more negative note Sir John is suggesting that as well as this recession becoming one of the worst in decades, there is very little the government or bank can do in the short term to influence the direction of the UK economy.
Economic output is set to literally fall off the edge of a cliff in the first half of 2009 and retail spending is set to come under yet more pressure. The fact that the Bank of England is unsure how to tackle the situation in the short to medium term, and any influence they may or may not be able to have, is the more worrying of the comments made in his Manchester speech. In effect the bank is saying that the UK economy is in freefall and while a fiscal stimulus and banking sector rescue package would be required, the impact in the short term will be minimal.
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