A RECESSION may be on the way, Paul Fisher from the Bank of England’s monetary policy committee (MPC) warned yesterday, as new data revealed retail sales and consumer confidence are plummeting.
The economy could “slide back approaching a recession, which is always possible with the sort of financial crisis overhanging,” Fisher told Bloomberg Television.
In the fourth quarter the economy “at best seems likely to be flat, could easily have negative growth.”
The following quarter could also be negative, he said – making the downturn an official recession.
Fisher hopes to see a solution to the Eurozone’s woes, which should return confidence to the economy. “If that doesn’t happen then we will have to look and see if we need to give more support,” he said, just weeks after announcing £75bn in additional quantitative easing.
Retailers are reporting sales for the time of year are their weakest for two and a half years. The CBI’s distributive trades survey found a net balance of 34 per cent suffering from poor sales.
Consumer confidence is at levels last seen in 2008 and 1990, immediately before the UK entered recession, according to the GfK NOP’s survey. The index declined to two points to minus 32 this month – thirteen points lower than October 2010.
The data “suggests the government can’t rely on people spending their way out”, said Nick Moon of GfK NOP.