British economic woes are set to deteriorate in coming months. The National Institute of Economic and Social Research (NIESR) says that the country is heading for a recession at least as bad as in early 1980s.
NIESR is one of Britain’s largest independent economic research bodies. It says that the main problem government needs to address right now is the availability of bank credit.
Looking ahead, the Bank of England will have to take corrective action urgently. It may have to slash the base interest rates to zero per cent. So we may see another interest rate cut even as early as next month.
The base interest rates are currently at 2%. Last time they were this low was in 1939.
Mind you, the rates were 4.5% only in October. Bank of England has taken drastic action to slash rates in record time shows the urgency of the situation.
Zero per cent rates mean that Bank is expecting lots of companies going into trouble in near future. This will inevitably give rise to unemployment, raising questions how many home owners will be able to keep up with their mortgage payments.
Will lower rates help stop repossession of homes? That is more than likely. At least that is a bit of good news!
Filed under: General
