risks of a double dip recession

Risks of a Double-Dip Recession for the UK economy

Mervyn King predicts choppy times aheadWe are facing a difficult time ahead with a slow and prolonged adjustment to the consequences of the banking and financial crisis

Mervyn King, May 2011

Growth is slowing down

Growth slower, prices higher and unemployment rising – not good

What could cause a double-dip?Retail slump as

real incomes fall

Weak export markets hit UK

Falling business confidence

Fresh recession in housing

Squeeze on public sector jobs

Consumer confidence on the wane

Many people expect unemployment to rise in the next year

And there are fewer jobs available for those out of work

Retail sales have sagged

Real disposable income is falling

Savers continue to be hit hard by negative real interest rates

Business investment dipping again

The UK mortgage market remains subdued

Few new houses are being built and many lost jobs in building trades

Even with inflation > 4%, interest rates set to stay low

The squeeze on state spending is coming in over the next 3 years

A rising tax burden will cut disposable incomes and domestic demand

Can the UK’s export industries provide a kick-start to a faltering economy?

Growth for a selection of EU countries

Stimulating demand and jobsBoosting the money

supply for the banking system

Taking advantage of lower currency

Measures to boost house-building

Encouraging innovation &

enterprise

Banking reforms to boost lending to

businesses

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