Bank of England chief warns economy could shrink by 6%

Andrew64

I don't like the sound of this. To me, a drop of 6% is heading into depression territory.

http://www.dailymail.co.uk/news/article-1141817/Bank-chief-warns-economy-shrink-6---just-months-Alistair-Darling-predicted-fall-1-25.html

Bank chief warns economy could shrink by 6%... just three months after Alistair Darling predicted a fall of 1.25%

"The scale of the economic crisis facing Britain was thrown into stark relief last night in a 'breathtaking' Bank of England analysis. It warned that the economy could shrink by as much as six per cent this summer as Britain grapples with a 'deep recession'."

"The gloomy picture painted in the report recalls the dark days of the Thirties, when the economy recorded annual contractions of more than five per cent."

BlondeHeadOn

From the news programmes last night, I thought he predicted 4%???

Or is he just making it up as he goes along?

That seems to be the 'in' policy at the moment!

kennyboy66_2

6% would be similar to the early 1980's recession.

Its just my view, but I think the pain this time will be spread fairly evenly accross the country.

In 1980-82 the brunt of that recession was felt by places like Scotland (industrial), South Wales, and northern cities.

WTF?_2

Andrew64 wrote: »

I don't like the sound of this. To me, a drop of 6% is heading into depression territory.

http://www.dailymail.co.uk/news/article-1141817/Bank-chief-warns-economy-shrink-6---just-months-Alistair-Darling-predicted-fall-1-25.html

Bank chief warns economy could shrink by 6%... just three months after Alistair Darling predicted a fall of 1.25%

"The scale of the economic crisis facing Britain was thrown into stark relief last night in a 'breathtaking' Bank of England analysis. It warned that the economy could shrink by as much as six per cent this summer as Britain grapples with a 'deep recession'."

"The gloomy picture painted in the report recalls the dark days of the Thirties, when the economy recorded annual contractions of more than five per cent."

Printing presses to warp factor 10 - that'll get us out of this mess. Clearly all we need is more money supply then everything will be hunky dory.

Makes you wonder what they'll do when we have rampant inflation and an economy that is going nowhere......

mbga9pgf

kennyboy66 wrote: »

6% would be similar to the early 1980's recession.

Its just my view, but I think the pain this time will be spread fairly evenly accross the country.

In 1980-82 the brunt of that recession was felt by places like Scotland (industrial), South Wales, and northern cities.

That was 6% over 2 1/2 years. This is 6% for starters in 12 months. This one will knock the socks off the 80's recession.

JayScottGreenspan

The BoE produce a range of estimates. 4% is the central projection, but it could be worse, it could be 6%.

FYI, the central estimate in the inflation report has the economy growing during the third and fourth quarters of this year. I think they'll have to wait until Q1 2010 for the return of growth. I suppose time will tell.

Cannon_Fodder

In the middle of the article;

"By this summer the economy will be shrinking at an annual rate of around 4 per cent, according to the Bank's best guess."

Adding what's already happened in 2008, around 2%, makes for a 6% recession over 18 months = worse than 80s?


According to;
http://www.independent.co.uk/news/business/news/bank-will-print-money-as-uk-sees-deep-recession-1607393.html

" The Bank of England is ready to launch a policy of "quantitative easing" – printing money – in an effort to lift the economy out of what the Bank calls "a deep recession". The Bank's central forecast, in its latest Inflation Report, suggests that annual growth in the UK economy will hit a nadir of -4 per cent in the summer of this year.

The Bank warns that "the risks surrounding the central projection for growth are judged to be weighted heavily to the downside", with an outside chance that the economy could, at its worst, contract by an annual rate of 6 per cent in the summer, a slump of historic proportions. "



Think the Mail headline comes from the worst-case prediction.

From the BBC site, prediction graph;

itsnever2lateisit?

A 6% drop would take us back to where? 2004 levels? Strange that all was well then, but a return to such levels of economic activity is a disaster now

WTF?_2

itsnever2lateisit? wrote: »

A 6% drop would take us back to where? 2004 levels? Strange that all was well then, but a return to such levels of economic activity is a disaster now

That's because the whole thing was run like a giant pyramid/Ponzi scheme. Credit was taken out against future expansion, which boosted the economy, which enabled more credit etc. etc. Everyone was leveraged up to the eyeballs on the basis that future growth was assured.

Once it's on the way down, the whole thing works just as effectively in reverse to multiply your losses. Not pleasant.