A post election economy downturn is a live and real threat |
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Published
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Sun, 29 May 2005 09:30
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The UK economy is set to face the inevitable downturn due to a great fall in consumer spending leading to unemployment and overall slump as predicted by a leading investment bank. The figures revealed by ABN Amro bank are quiet alarming.
It is estimated that almost 500,000 jobs will be lost by the year 2008, and the industry to suffer the most would be retail, construction and manufacturing. Prices of property will further slash by almost 10 percent as deciphered by ABN Amro. To add to this potion is “household debt” which after crossing £1 trillion will become one of the root cause for unemployment. Besides, there will be shutdown of at least one retail store out of 20 by the year 2006.
| The economy already heading to troubles can be witnessed with IBM, leading computer conglomerate cutting jobs, to the extent of releasing about 4 percent of the total workforce as part of the restructuring strategy.
Reports lucidly explain that low consumer spending will lead to a vicious circle, resulting in unemployment and slowdown of the economy. Lack of savings will further depress the situations. HSBC, also joined the bandwagon and expressed similar views with oodles of depression and despair.
Faltering growth will increase government borrowings and will consequently burden public finances causing unnecessary problems to the Chancellor. With borrowings to cross 4 per cent of GDP, it is known that “deficits are likely to worsen substantially”, as told by Mr. Butler of HSBC.
Another forecast from James Knightley, ING Financial markets economists bring to understand that “recession” has already started creeping in. The economy has considerably slowed markedly in the past few months and there is growing evidence of this, as activities plummet, indicated at the backdrop of a tête-à-tête with the Bank’s Monetary Policy Committee.
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