Crisis in UK has worsened in six weeks says King
BRITAIN'S economic outlook has worsened markedly in the space of just six weeks due to the deepening eurozone crisis and signs that a global slowdown is taking root in the United States and emerging markets, the Bank of England said yesterday.
Bank Governor Mervyn King told legislators the world is not yet halfway through the financial crisis that began in 2008, and that Britain risked a downward spiral as businesses continue to put off investment due to the turmoil in the eurozone.
His comments bolster expectations that the Bank will launch a new round of asset purchases next month under its quantitative easing programme, and suggested the central bank and British government may need to come up with further measures.
Evoking the depression-ridden 1930s, Mr King said it would be difficult to overcome the hit to confidence from the "black cloud" of uncertainty with consumer and business spending alone.
The European Commission cautioned yesterday that Ireland's problems could get worse as Britain's economy falters.
"We are in the middle of a deep crisis, with enormous challenges to put our own banking system right and challenges for the rest of the world that they are struggling with," Mr King told parliament's Treasury Committee.
Britain's economy slipped into its second recession since the start of the financial crisis around January and fears of a longer slump have been rising as companies hold back investment and exports suffer from the eurozone crisis. (Reuters)