Recession forces surround a battle- scarred UK economy

January 24th, 2009 by admin | Filed under Daily News, Global Credit Crisis, Recession, Retail, The Markets, UK Bank Accounts, UK Banks, UK Small Business, UK employment.

Picture the scene. Gordon Brown playing the part of the Godfather and Alistair Darling is Tom Hagen, his local councilor. Alistair/Tom comes to Don Vito/Gordon bearing some really bad news that the Godfather already knew. Not that Sonny had been shot on the New Jersey Turnpike, but that the UK economy was now in officially recession.

Don Gordon’s greatest fears will be confirmed when the Office for National Statistics release the official figures at 9:30 a.m. today. The figures are forecast to show the UK has experienced two consecutive quarters of negative economic growth.

All the forces that have are components of the recession scenario have been steadily whittling away at the economy have been growing force over the last six months, with them the inevitability of recession. The forecast is that Great Britain will remain in recession for the next eighteen months at least. The Governor of the Bank of England recently announced the pace of economic contraction is likely continue to be marked for the first half of 2009. Falling house prices, rising unemployment and loan rationing will continue to haunt the UK economy, leaving almost no leeway for any forward movement.

Meanwhile some fairly strong warnings of a bankrupt Britain in the offing with the consequential humiliating bailout by the International Monetary Fund (IMF) due to the Labour government’s disproportionate borrowing came from leader of the opposition Conservative Party, David Cameron. Cameron warned “If we continue on Labour’s path of fiscal irresponsibility, at some point – and it could be very soon – the money will simply run out. Again” The “again” referred to another black day in the UK’s economic history in 1976, when the Labour government was forced to make deep public spending cuts in return for a £2.3bn loan from the International Monetary Fund.

“We are borrowing, according to the Government’s current estimates, 8 per cent of our GDP in the next financial year. That is the same percentage that Denis Healey [the then chancellor] was borrowing when he went to the IMF in 1976.” The Tory leader added:

U.K. house prices are expected to continue drop, with forecasts that they are liable to fall by 15% in 2009.

Despite all efforts to the contrary, number of house repossessions in the last quarter of 2008 was compounded by a ten percent rise in the number of home-loan repayments that were late in the third quarter of 2008. The number of homeowners that were in serious arrears for the period increased from 54,000 to 60,000.

The Financial Services Authority also announced on Wednesday a staggering rise of 92% on the number of houses that were actually repossessed by the banks in the last quarter of 2008. The number of families who were forced to surrender their homes was a heartbreaking 13,161.