Tuesday, October 21, 2008

UK is in recession, says Bank of England Governor Mervyn King

By Edmund Conway and Angela Monaghan Last Updated: 7:41AM BST 22 Oct 2008

Britain is now in recession after the banking system came closer to collapse than at any time since the beginning of the First World War, according to the Governor of the Bank of England.
Mervyn King has become the first major UK economic policymaker to warn explicitly that Britain is heading into technical recession, but he said that history was likely to judge the Government’s £37bn banking recapitalisation as the turning point in the sector’s crisis.
In an unusually frank speech in Leeds last night, Mr King laid bare the devastation left by the worst financial crisis in living memory, predicting that house prices would fall further and that economic hardship would last for years.
He said: “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. It seems likely that the UK economy is entering a recession.”


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