JPMorgan Warns of Worst Crisis since 1990s; Grim Read: Alistair Darling Is Already Braced for Bad News from the Bank of England
Byline: HUGO DUNCAN
ONE of the world's biggest investment banks tonight warned Britain iscareering headlong into its worst economic crisis for a generation.
JPMorgan Chase Bank said the UK faces the "twin demons" of recession andrunaway inflation a poisonous cocktail not seen since the early 1990s.
"The coming months will provide a major test of the UK's economic resilience,"says a report by the bank's City economists Malcolm Barr and Allan Monks. "Ourcentral forecast is for a slowing in growth which is deeper and more prolongedthan seen since the early 1990s." This will make grim reading for Gordon Brownand Alistair Darling, whose reputation for economic competence has beenshattered since the collapse of Northern Rock last year.
The report comes as the Chancellor and Bank of England Governor Mervyn Kingprepared to exchange open letters to address the deteriorating situation.
They will be forced to write to each other tomorrow if, as expected, officialfigures show inflation rose above 3% last month, driven higher by food andenergy prices.
Oil hit a record high of $139.89 a barrel in New York tonight while the housingmarket continues to be buffeted by falling prices and a lack of mortgagelending. Barr and Monks say that the UK economy "faces twin demons that haveplagued it in the past but have been dormant for almost a generation: risinginflation and the possibility of a housing-led recession. …