Last week I reported on David K. Smith's pessimistic outlook for the U.K. economy, and a similar set views in a Financial Times column from editor Chris Giles. Now it looks like those views have been corroborated by the facts. Calculated Risk points to this, from Bloomberg:
U.K. manufacturing had its biggest drop in almost three years in March, pushing industry closer to recession and damping expectations of higher interest rates after the Bank of England left its benchmark rate unchanged today.
The decline in manufacturing comes on top of signs of a slowdown in consumer spending in the U.K.'s 1.1 trillion-pound ($2.1 trillion) economy. A reduced pace of economic growth and a widening budget deficit may increase pressure on Prime Minister Tony Blair to raise taxes and limit his scope to overhaul public services. Blair won a third term in office on May 6.
"We're in an environment of decelerating growth, and that's clear from these numbers,'' said Steven Andrew, an economist at F&C Asset Management in London...
If that's not enough, the Financial Times let's loose a whiff of the S-word:
The UK economy is weakening but inflationary pressure is growing, a wide range of economic figures suggested on Monday, casting a shadow over the start of the newly elected Labour government's third term in office.
The Bank of England, caught between the two contradictory forces, left interest rates unchanged at 4.75 per cent after a monthly meeting that had been delayed to avoid coinciding with last Thursday's election. The Bank will explain its thinking in its quarterly inflation report published on Wednesday.
And here's what may be the beginning of that bad news on housing prices y'all been waiting for:
The housing market appears to have slowed to a halt with figures from the Land Registry showing 0.3 per cent growth in prices in the first quarter of this year compared with the last quarter of 2004. House price figures from the Office of the Deputy Prime Minister showed the same trend.
CR (guest blogging at Angry Bear) wants us to know he warned us.
UPDATE: The Prudent Investor, reporting on U.K bankruptcy statistics, provides this cheerful metaphor:
Compared with the ailing economies in continental Europe Britain was dubbed a powerhouse in the last months. A cooling housing market and the highest personal debt levels in the European Union could become the demolition ball for the powerhouse.