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5 "Tells" that the Stock Markets Are About to Reverse

UK Economic Slump Accelerates towards Recession

Economics / UK Economy Nov 05, 2008 - 12:44 PM GMT

By: Nadeem_Walayat

Economics The UK economy battered and bruised by the fallout from the financial crisis as bankrupt banks sought a huge £500 billion bailout form the UK tax payer, was further hit today by the continuing contraction of Britain's industrial base as UK factory production continued to fall by 0.8% for a seven straight month, which acts as further confirmation of an imminent deep recession. The slump in sterling of 25% has been voiced as a boost to Britain's export sector, however clearly this is not happening as the already diminished industrial sector continues to shrink and therefore even if the crash in sterling does boost exports, the impact on the overall economy is expected to be muted as the industrial export sector has shrunk to less than 4% of the economy, whilst the huge financial services sector in terms of % of GDP continues to implode.


The Bank of England is widely expected to cut interest rates at tomorrows MPC meeting following the Government ordering the BOE to abandon the targeting of inflation which stands well above the 3% limit, at currently 5.2%. Today's economic data only deepens the likely hood of the bank announcing a far bigger cut than the expected 0.5% as I voiced as a strong probability in Sundays article - Credit Quake Persists Ahead of UK Interest Rate Cut of 1%?

The existing Market Oracle forecast made prior to Octobers 0.5% cut, was that UK interest rates would fall by 0.5% at Octobers meeting, with a further cut of 0.5% at Novembers meeting and a continuing down trend to 3.25% by September 2009. However the forecast was made at a time when the Bank of England was firmly in charge of interest rates, which now suggests that rate cuts could go as low as 2% due the the repeated failure of the LIBOR interbank market to unfreeze as the below graphs illustrate.

Current scheduled forecasts are for for UK inflation, GDP and the much in demand UK house prices following the crash of 2008. Subscribe to our always free newsletter to get the scheduled analysis in your inbox on the day of publication.

By Nadeem Walayat
http://www.marketoracle.co.uk

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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Nadeem Walayat Archive

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Comments

Tim
28 Aug 09, 20:46
An idea that could help some people

Whether it's the UK, or America we are talking about, to the individual reader, usually one thing matters most- what can they do in this situation if they are one of the statistics mentioned here?

Since so many are talking about being more creative during this economic slump, why not think outside the box a bit? Here's what I mean.

It's amazing that there are plenty of skill sets that are for whatever reason not "conventional" enough to be taught in schools, but the mastery of which would lead to more autonomy.

Most of us are trained to be employees- nothing wrong with that, but thinking that way can be a kind of tunnel vision that keeps many from learning skills that would allow them to carve out their own path to income and contribution.

One of them is as close as the computer in front of you. No really, for the first time in history, we are 3 feet in front of the world, yet few learn how to use it in a way to render 1) value to others and 2)income for themselves.

There ARE ways to learn this stuff, if you can avoid all the junk and find good and reputable sources. The great thing about it is the very process of learning how to market or gain customers through online means can help virtually ANY business as well.

http://leavethejobbehind.com


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