Wednesday, October 22, 2008
King admits recession under way
Posted by David Smith at 08:59 AM
Category: Thoughts and responses

Mervyn King, in an important speech, underlined how dangerous the financial crisis of the past few weeks was. "Not since the beginning of the First World War has our banking system been so close to collapse," he said. The Bank of England Governor is confident that the banking rescue will work but admits that it will not prevent recession.

"The combination of a squeeze on real take-home pay and a decline in the availability of credit poses the risk of a sharp and prolonged slowdown in domestic demand," he said. "Indeed, it now seems likely that the UK economy is entering a recession." The pound has tumbled in response to that sentence and the prospect of aggressive rate cuts. The speech is here