Guardian UK: Markets dive as depression fears grow

[marmar]

Fears that Britain could slip into a protracted depression intensified tonight as markets took fright at the US central bank's wary economic outlook, the Bank of England's own warnings on the UK, and a slew of gloomy data.

With businesses and households fretting over swingeing public sector spending cuts and shaky economic prospects around the world, the Bank cut its growth outlook and warned that Britain faces a long and "choppy recovery".

The move came as official figures showed a sharp rise in long-term unemployment and a smaller than expected fall in the number of people claiming jobless benefits.

The Bank's outlook intensified the debate over whether the economy is heading for a double-dip recession, or at least a period of depression. The National Institute of Economic and Social Research thinktank defines depression as a period when output is below its previous peak, and has predicted that in the UK's case this will last until 2012.

Faced with calls from trade unions to scale back its cuts or risk seeing growth peter out, David Cameron's coalition at least got some support for its austerity measures from the Bank's governor, Mervyn King, who reiterated that a fiscal squeeze now would reduce longer-term risks to the economy. ............(more)

The complete piece is at: http://www.guardian.co.uk/business/2010/aug/11/market-fears-depression-double-dip

[Prometheus Bound]

1. That's depressing reading. "Protracted Depession"!