Financial News
- 18 June 2012, 16:09
Recession: Double Dose Of Doom For UK PLC
There is fresh evidence that the UK economy will fail to overcome the recession in the short term.
The effects of the Euro crisis have been laid bare by the latest trade figures for April - while construction output fell sharply over the month.
Official figures showed the UK trade deficit widened to its greatest level in nearly seven years, as exports to the embattled eurozone plummeted.
The goods and services deficit - the gap between imports and exports - rose to£4.4bn from £3bn in March, the Office for National Statistics (ONS) said.
The increase was driven by an 8.6% drop in exports, including a 6.8% fall in exports to the EU, the UK's biggest trade partner.
Elsewhere, official construction data showed a 13% fall in output in April driven by a fall in government projects, including housing and infrastructure.
The double dose of disappointing data dampened hopes that the economy may return to growth and emerge from recession in the second quarter.
Last night, the Bank of England governor Sir Mervyn King and Chancellor George Osborne surprised the City with emergency plans to help boost credit facilities for businesses through cheap loans to banks.
The sole aim of the Funding For Lending scheme is to bolster the economy, while a separate initiative will help improve liquidity in the banking system, the men said.
But the latest economic statistics seem to have largely wiped out a mood of improved optimism in the wake of the announcement at Mansion House.
Howard Archer, chief European and UK economist at IHS Global Insight, said: "With the trade deficit widening in April and construction output again disappointing, the chances of the economy avoiding further contraction in the second quarter are dwindling."
Earlier this week, a surprise 0.7% contraction in manufacturing output for April gave birth to gloom that the second quarter had got off on the wrong foot.
Wider industrial production figures were flat but only propped up by higher energy use, explained by the cold, wet and windy start to the summer.
what do you think?
Sharon Houghton
No suprise, the people of the UK are skint have been for a while and with how things are will be for much longer unless your a fat cat or politition. Maybe we should all apply for the new made up bank loan.. but again unless your in the chum club you cant apply... An the promise of economy boost from the Olympics was always gonna be a flop, killing off true tourism,, welcome to GREAT Britain... Not
paul woodhead
Here Here Brian!!
David Francis
The endless chasing of econimc growth is what is destroying the sanity of those who govern us. It is resulting in overspending by the public and government alike. When both of these start to run out of money, they HAVE to cut back on the spending to avoid bankrupcy. Recession is hence inevitable but if the economy contracts by just 0.2 0- 0.8% or so, this is just a moderate realigning of the market-place. It is not a disaster - except for the popularity of the politicians. As long as everyone avoids kneejerk reactions, it will sort itself out. Avoiding the reactions is the hard part.
David Rhys Price
I totally agree with you David. it is easy to get into a permanent doom and gloom mindset, which in time becomes a self fulfilling prophecy . In spite of the current situation I believe that the U.K will weather the storm, with or without the European Union to hinder us. The important thing is not to get 'negged out' in the meantime, and to make the best we can of the circumstances we find ourselves in.
Lee Bennett
enough money left to spend billions on the jubilee tripe .
Michael Hawkins
Reduce Taxes and benifits This would allow those working to spend more creating jobs for those on benefit
Criss Nash
This comment has been removed for violations of our Terms and Conditions.
Chris Robinson
While billions of pounds of our taxes lay sloshing around in the banks' vaults and billions more in the accounts of big business who will not invest unless they see a profitable return, they should be made to invest in manufacturing and the infra-structure and in our services. We could create full employment if there was the political will to do so but the CONDEMs are incapable and/or unwilling to do this. Labour is also tied to the capitalist system. It's time for more of our unions to break away from Labour, form our own party and campaign on these very issues.
Brian Holmes
11:17am on 15/6/2012
So here is the proof. Austerity cannot work because when people have no money it kills demand for goods and services. Add Britain's larcenous tax regime to that and you have financial suicide.
Windows Live User
1:57pm on 15/6/2012
I think there are plenty with money, but persuading them to spend is a different matter We need quite a few of our rich men to begin spending on projects and money will begin to flow, quickly followed by belief
Michael Hawkins
6:10pm on 15/6/2012
Take a good look at Greece and you will see what spending out of trouble does At some time you have to pay it back £350 billion and they are still in the mire Government worker not paid for 7 months - 25% increase in homlesness Self employed income dropped by 75% If you keep borrowing eventually you can pay back the interest the interest let alone the original loan Public servant income was frozen for 2 years and then 1%. Why was the same not applied to all who take government money
Brian Holmes
6:30pm on 15/6/2012
Take a good look at UK and you will see what austerity and crippling taxation does. Ask a critically sick patient to make blood donations while at the same time cutting off his oxygen and it doesn't take a genius to know what the outcome will be.