Sky News business editor Michael Wilson

We aren’t in a recession, as economists would technically define it ( shrinking for economic growth six consecutive months) but I’m sure you’ll be feeling as if you’re in one. Suddenly, over the past few weeks, it seems as if the whole economy has slowed down and the dawning realisation of what a high oil price means is beginning to sink in. People are seeing more and more of their bills rise and are really feeling the effects of the credit crunch.

As a barometer of our shopping crazed economy, the British Retail Consortium usually presents a canny snapshot of what the national psyche is up to. Thus it’s a bit depressing to read in its latest consumer confidence survey that two thirds of Britons believe the country is in recession. One in five said that the economy was their biggest worry, and high interest rates, and presumably their debt, was the next biggest concern.

And during a slowdown like this one, more than half said that inflation was their main fear.

So last week’s decision by the Bank of England not to cut the interest rate will have ‘pleased’ these worriers. Although, as I said last week, it will be interesting to see how the Monetary Policy Committee manages to resist pressure to lower the base rate as the economy slows, as it surely will.

In fact, the profligacy of Labour’s loose fiscal stance , and the Bank’s almost impossible task of trying to reign in inflation while the economy slows is unprecedented and very dangerous territory. Add to that the very public tussling over the appointment of a new Deputy Governor. This is not a time for a central bank and one of the key guardians of the economy to have a vacancy on the bridge.

Comments

[Jeremiah1974 10 Jun 2008 12:15:46]

Yes, in the long term peak oil.

But what's going on now is a commodities bubble.

[Christopher Briggs, Norway 9 Jun 2008 16:56:19]

But we oil bloggers have been warning you all for years. At least I have. EVer since I first read about Peak Oil in 2004, I have been trying to get people to wake up; instead, they only go on planning new roads and airports, and only last week I heard you are wanting to build a third runway at Heathrow, flattening a village in the process. All this at a time when even the economists on Bloomberg see that aviation is going to "contract". Also, if you'd wake up to it, you would see that the whole climate change hype is a cover story for this

[Michael Cornwall 9 Jun 2008 16:18:55]

Every one I speak to says the same thing tough times but no leadership.David on your show on thursday last said there were things that could be done, house building would have to start again . I thought the lady on Friday was wise too, made some good comments. The government seems to alienate everyone, they will pay a price, people will remember for a long time, the incredible dithering. I am starting to talk to farmers down here Michael to see how they are faring. There are so many different types of farmers here. The first one I have spoken to were the Oates family from Goonhilly downs on the Lizard. Asked to divercify,they amazingly imported Camels and do camel treking and also organic meat. Interesting comments tes times are tough. Fuel has hit them as they drive to the abbottoir drive back, and then drive to deliver,no chance of increasing charges, as it is too competitive.What they say that you would not notice in London is that people are not driving around as much. For them and alot of people in rural locations this drive around passing trade is very important, As their customer base expands. Tough times great need for positivity.

[Robert, Scotland 9 Jun 2008 15:28:32]

The Monetary Policy Committee are failing as guardians of the British economy. Everyone but them has realised the upwards inflationary spiral is the result of world markets beyond their control (or ours).
Their obstinancy in keeping the base rate high is akin to the Government's delusion that if they impose swingeing "green" taxes on the British public this will result in the world being saved from Global warming.
The MPC should stop this absurd impersonation of King Canute and do something constructive to help the British economy.

[Khalid 9 Jun 2008 13:43:13]

Sir
Would you adam and eve it, if politicians can't control the economy themselves in order to get a vote or two, they create an underlying vacancy in the hope they will scare the controller.
But, have I got news for you if that was your emerging theory dear politcos. You see, Mervyn and crew have a task to do and unlike voter apathy it is not a matter to adjudge them mid term and create havoc just because the rest of the world is falling apart.
The fact the retail consortium report recession can be put down to two factors. (1) By-elections. (2) They have put their prices up to cover the cost of fuel etc.
Now, consumers have come to realise they need not go out each week and spend £100 to feed a family of two and end up chucking away £80' worth of food, but become prudent in their spending and only buy what they need.
Then with the sudden emergence of £2.7bn, is it any wonder we are all feeling the pinch? Ask me and I would apply for the job, but [Can You handle It-Usher]?

[Gary (London) 9 Jun 2008 13:27:25]

Sir,

One of the biggest problems in todays financial world stems from the Treasuries recent policies, instead of accepting that there is a natural ebb and flow, Gordon Brown has attempted to create a culture of constant growth.

Making the cost of borrowing unrealistically cheap, has contributed to the ideals of a buy now pay later society where everything is affordable and poverty is defined by what gadgets you have or rather do not have.

Slowly using up the reserves of cash (selling gold reserves, increasing the public payroll and asssociated benefits) and saving nothing for a "rainy day" he has ran the country dry, and as a consequence at a time when day to day essential living costs are increasing, we cannot cut back on taxes ,indeed we are forced to pay more in taxes to keep up the governments spending, as well as coping with increasing costs of other necessities e.g. food. This leaves us with little to spend on other areas of our life and we are now seeing a slowdown on the high street.

There is little B of E can do as the cost of lending is defined largley by LIBOR, and given the banks lack of trust in each other this is unlikely to fall, at least in the short term. So as a result of the increased borrowing costs, and the cost of oil etc, for the short term at least we can expect to see this downturn continue.

[PETE BRIGHTON 9 Jun 2008 13:05:45]

cthe everson cheeful businees tem at sky. Do you people ever smile or do you live in a perpetual state of depression. Look, you report inacurately. The figures that you put out are so behind the curve its down right misleading. The country began slowing down lst august and the time it takes for this to slift in to the economy is enormous. The way you report these things just adds to the depression, its like depression upn depression upon depression with you lot. Come on do something to get the coutry moving again. Get a grip!