FEARS of a double-dip global recession intensified yesterday after a slew of depressing economic news highlighted the fragility of the world economy.
Bank of England governor Mervyn King warned that Britain might have to resort to further quantitative easing (QE) if the UK economy deteriorates further. He highlighted the stalled recovery in the Eurozone – the UK’s largest single export market – as a particular concern.
Deputy governor Paul Tucker stressed yesterday at a separate event the risk of stagflation for the UK economy, should the recovery be less robust than forecast and demand anaemic. The warnings came as data from the British Bankers’ Association showed a fall in mortgage lending approvals last month.
King reiterated that chancellor Alistair Darling needs to present a detailed plan to deal with the ballooning fiscal deficit but the International Monetary Fund yesterday backed Labour’s wait-and-see approach, warning that the weakness of growth required tax hikes and spending cuts to be delayed until next year.
US consumers were at their least confident in 10 months due to concerns about business conditions and unemployment. House prices in 20 US cities also fell in December, against forecasts for a rise. And in Germany, the Ifo business confidence index slipped in February.