Sky Business Presenter Shola Olowu

Not one, but two, chief executives in as many days are warning that the UK economy is heading for a recession. The new boss at mortgage lender Bradford and Bingley, forced to go cap in hand to a US private equity group for funding yesterday, says the economy is in bad shape and it is hurting its business. While Ryanair’s Michael O’Leary says after years of growth things are going to get worse for the economy and the airline industry…. “so don’t fly BA, fly with us, because we’re cheaper”.

But what does the data say? Well, construction activity has fallen for a third month in a row and at the fastest pace for a decade. Manufacturing failed to grow at all in May – the first time that’s happened in 3 years. Mortgage deals are evaporating – they’ve dropped to the lowest level since records began and according to the GFK survey, consumer confidence hasn’t been this bleak since 1990. And no wonder we’re gloomy when we are not out shopping on the High Street. If we do indulge in some retail therapy we are paying more for what we buy.

All of this gives the Bank of England plenty of food for thought when its Monetary Policy Committee makes its interest rate decision on Thursday. The UK economy did grow in the first quarter of this year but the figures are nothing to shout about. However, stimulating growth may not be an option for the central bank while inflation continues to rear its head, with prices rising throughout the country. Are we in a recession? Maybe not yet but it seems like it may just be a matter of time.

Comments

[Robert, Scotland 4 Jun 2008 09:32:31]

Keeping the economy on the move should always be the first consideration for the Monetary Policy Committee. Sometimes inflation is secondary to the overall needs. A cut helps people with mortgages and businesses, this is a much needed boost on the home front which softens the inflation due to World market forces. A quarter percent cut is a drop in the ocean in the current inflationary climate but, it can work wonders with people's morale.

[Michael Cornwall 3 Jun 2008 19:11:41]

I was quite fascinated to see two different types of people on Sky News talking about recession. The guy from Bradford and Bingley does not have much street cred. Michael Yesterday did not seem impressed by B&B He called it a fiasco.To me the guy today seemed to be saying we blew it but had a good excuse. The Ryan boss seemed cool to me. I'll have what he's drinking, simply because he has bravery in the face of difficulty.I bet he will steer his company through,and I think he is a leader. B&B i bet they get sold. David on the show tonight said what we lack is confidence,He's right confidence will come from good leadership. Sorry but where is it.

[Khalid 3 Jun 2008 14:47:47]

Sir
How ironic that Sky News has been talking about harder times for god knows how many months, and yet the expert advise appears to have been floating amongst the clouds within many a boardroom.
Indeed, one of the most concerning elements for global stability surrounds the price of oil, which has now been affirmed by the Iranian President to be in plentiful supply and considering the fact that only recentlt we witnessed the biggest gamble fail in political history, costing the taxpayer £2.7bn, I wonder if the price increase has been staged to return what was gambled otherwise known as double jeopardy.
Whether we fly by Ryanair, buy to let with B&B or enjoy the luxurious delights of British Airways, you get what you pay for, so hardly a like for like comparrison.
Having said that, oil will drop and people will live that much longer and be able to shop to their hearts' content, however, if the MPC were to act in a manner not befitting long term stability, we will only have our selves to blame for prolonging prosperity. The only thing for sure is that fiscal policy needs to be [Solid As A Rock] so that we can all enjoy the fruits of our pain with [Ashford & Simspon]