Newspaper article The Evening Standard (London, England)

Bank Urged to Cut Rate as Economy Dips to 1992 Levels

Newspaper article The Evening Standard (London, England)

Bank Urged to Cut Rate as Economy Dips to 1992 Levels

Article excerpt

PAUL WAUGH Deputy Political Editor THE BANK of England faced calls for an urgent cut in interest rates today after it emerged the economy had come to a halt.

A string of economists warned Britain will slide into recession unless the Bank steps in swiftly to ease pres-sure on businesses and homeowners.

The Office for National Statistics reported growth had slowed to zero between April and June, the worst fig-ure for 16 years and lower than the modest 0.2 per cent growth estimated.

It ends a run of 63 consecutive quar-ters of growth since April-June 1992, when the UKs gross domestic product shrank.

The gloomy figures shatter Gordon Browns boasts of continuous eco-nomic growth since Labour came to power in 1997. They also increase fears of recession defined as two consec-utive quarters of negative growth.

Stewart Robertson, of Morley Fund Management, said: The Bank needs to do something to prevent a fairly shal-low recession from getting worse. They need to cut rates this year.

Brian Hilliard, of Societ? G?n?rale, said: This really does put a rate cut firmly on the agenda, although it is unlikely to come until we have seen the peak in inflation.

Chiara Corsa, of Unicredit, said: We have so far bet on a Bank of England on hold till the end of the year. However following todays weak growth number we think that the UK economy will hardly escape the technical recession.

Capital Economicss Jonathan Loynes said: The second estimate clearly increases the, already strong, chances that the economy will fall into recession over the coming quarters.

Bank of England Governor Mervyn King last week said there was bound to be a quarter or two of negative growth as rate-setters fight the economic slow-down and rampant inflation.

The Tor ies and i ndependent economists said Gordon Brown should shoulder the blame.

Shadow chancellor George Osborne told the Standard: For years, Gordon Brown has boasted about consecutive quarters of economic growth.

Now the economy has ground to a halt and the Brown bubble has burst. Mil-lions of people are paying an unfair price for Labours economic incompe-tence and the fact that the Prime Min-ister didnt put money aside during the good times to prepare for a rainy day. …

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