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Bank of England paints a bleak picture for global economy

Despite reducing UK base rates by half of one percent the Bank of England has tonight painted a very bleak picture of the global economy which it believes is in the "throes of a severe and synchronised downturn". The bank has also highlighted the fact that until the UK credit markets increase liquidity the ongoing reduction in UK base rates will have little impact on the overall performance of the UK economy. As ever the availability of credit in the UK is the most vital element of any potential recovery.

In a marked change of strategy it would appear that the UK government and the Bank of England are starting to look at the global economy and the difficulties in the short to medium term. Historically the Bank of England has tended to concentrate on UK matters but as Gordon Brown suggested in the Commons only yesterday, the global economy could be headed for a "depression" or was that a "recession".

For the Bank of England to paint such a bleak picture at the same time as reducing UK base rates to levels not seen for over 300 years is of real concern to many in the investment market. In many ways it looks as though the Bank of England is resigned to the fact that the global economy is moving towards a depression rather than "just" a recession.

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