Britain facing worst economic conditions for 60 years
In an interview with the Guardian newspaper, Chancellor Alistair Darling said the UK is facing the worst economic downturn in 60 years and it will be ‘profound and long lasting’.
Mr Darling’s stark warning comes as the Nationwide revealed that the average house price has fallen by 10.5% over the last year – this represents the fastest fall since 1990.
Furthermore, a member of the Bank of England’s Monetary Policy Committee warned that two million people could be unemployed by Christmas. Meanwhile, last week the CBI reported the weakest high street activity in 25 years.
Food and petrol prices continue to rise while rising fuel costs mean millions of families face fuel poverty.
Mr Darling confessed to being challenged at a petrol station recently by a motorist struggling with the rising cost of petrol. The motorist asked Mr Darling what he plans to do about it.
Shadow chancellor George Osborne has criticised Mr Darling for his grave assessment and said he had ‘let the cat out of the bag’ about the state of the economy but Mr Darling defended his assessment and said it is his duty to be honest with the public.
The slowing economy means Labour faces its toughest challenge since the 1980s. Mr Darling said the next year will be the most difficult that the Labour party has had in a generation.
However, Justice Secretary Jack Straw, has said Labour is best placed to see Britain through the current economic downturn.
In an interview with Andrew Marr on BBC One, he said Labour would help the UK to ‘weather these storms’. Mr Straw defended the Chancellor and said he had not spoken out of turn.
Earlier this month, delivering the Bank of England’s August Inflation Report, Mervyn King said the next year is to be a difficult one, with inflation high and output broadly flat. Mr King refused to rule out the possibility of a recession.
The UK’s annual rate of inflation surged to a record high of 4.4% in July and is at its highest level since current records began in 1997.