Press Release Summary: The fear of recession is haunting London due to squeezed credit and inflation.
Press Release Body: London (Shakespeare Finance) August 26, 2008: The City of London is now under the fear first recession since the early 1990s. This fear started granulating after the government revealed that belt-tightening by households and business brought growth to a standstill in the second quarter of this year.
The government has revised down growth from 0.2% in the three months to June to zero. The annual growth rate of British economy slowed to 1.4% - its weakest since the period in late 1992 immediately after the pound left the Exchange Rate Mechanism on the fateful Black Wednesday. With the unavailability of easy credit and loans, not only the manufacturing and construction contracting but also the household spending dropped by 0.1% and investment by companies dipped by 5.3%.
The whole economy has not seen a single quarter of falling growth since the early 1990s, but analysts said that the economy was on course to fulfill one definition of recession as two quarters of declining GDP in the second half of 2008. The domestic side of the economy, which excludes trade, has been on the squeezed path since the start of the year as the credit crunch and rising inflation have created a havoc for consumer spending. House building has also slumped as the Immovable property market has suffered, prompting calls from the House Builders Federation for lower interest rates from the Bank of England.
The inflation rate is expected to hit 5%. in such a circumstance, analysts are believing that BOE will delay reducing the cost of borrowing, putting added pressure on the government to boost the economy with a package of tax and spending measures this autumn. It is quite certain that the economic growth has ground to a halt and Brown\'s bubble has burst. Millions of people are paying an unfair price for it.
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