Whether Britain is going to enter a recession is a hot topic for discussion at the moment – it can only be determined in retrospect, because a recession is by definition two successive quarters of dropping national output.
However, the trickle of bad news turned into a torrent this week as major companies announced massive job cuts, share prices slumped into a bear market and the services and manufacturing industry presented figures showing a decline in orders and sales.
Most recently, the G8 world leaders raised their voices in deep concern about the global economic climate.
The latest official figures on employment showed that, after years of steady decline in unemployment figures, the number of Britons out of work and claiming benefits has risen for the forth month in a row, and the number of jobseekers was up by 38,000 in April.
The Organisation for Economic Cooperation and Development foresees that 100,000 jobs might be lost over the next two years, and Capital Employment even predicts a rise in unemployment of about 1 million.
Due to fears of imminent recession and further write-offs from troubled banks, shares of leading UK companies plummeted into a bear market: the FTSE 100 fell to 5358.7 points yesterday, more than 20 per cent less than its 12-month peak of 6730.7 reached on October 14 last year.
The Bank of England
's Monetary Policy Committee (MPC) has so far resisted pleas to cut the interest rates for fear that inflation, which is already by far over the 2 per cent target, might soar further.
While Gordon Brown insisted that the UK was well placed to get through the global economic downturn because of high employment, low inflation and financially healthy companies, the G8 delivered their gloomiest assessment so far last night.
The statement of the G8 said: "The world economy is now facing uncertainty and downside risks persist.
"Among others, we express our strong concern about elevated commodity prices, especially of oil and food, since they pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable, and increase global inflationary pressure."
The world leaders vowed to do their utmost to improve the situation: "We are determined to continuously take appropriate actions, individually and collectively."
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