UK Economy in Bad Shape

Since the end of last term, the UK economy has experienced a miserable summer. In the past few months, the economy has slowed down and now looks set to enter a recession. In particular the weakness of the economy is characterised by:

1. Rising Unemployment. (Forecast to reach 2 million within 6 months)
2. Falling value of Pound. Weakest level against Euro since Euro was introduced.
3. Falling House prices steepest since crash of 1991
4. Lower consumer spending as consumers get squeezed by rising living costs and stagnant real wage growth. Consumers also badly affected by falling house prices and negative equity.
5. Rise in Government borrowing bigger than expected because of economic downturn.
6. Credit crunch causing paralysis in mortgage markets. This is particularly affecting sectors such as real estate and Construction.
7. Inflation above government’s target making interest rate cuts difficult.
8. Falling investment levels

Whose Fault is the Recession?