Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (24741)	1/16/2005 9:08:19 PM
From: Kailash	Respond to of 110194

'Only rate cuts can save us' Top economist says slashed public spending and house price slump mean recession - unless Bank acts Heather Stewart and Heather Connon Sunday January 16, 2005 Observer This will be 'the year the luck runs out' for homeowners, consumers and the Chancellor, leading economist Roger Bootle warns today, predicting that the Bank of England will have to slash interest rates to stave off a recession. In his quarterly economic health-check for accountant Deloitte and Touche, Bootle warns that as the housing market downturn accelerates, economic growth will slow to 2 per cent this year, from well over 3 per cent in 2004. 'There are two big stimuli that are going to give out: the housing market, and government spending,' he says. Gordon Brown's cash splurge on schools and hospitals has helped to prop up the economy over recent years, but in last summer's Spending Review the Treasury announced an easing in the pace of spending growth. 'Even if you assume that there are no tax rises, the change is going to be devastating,' says Bootle, who expects the Chancellor to exacerbate the slowdown next year by pushing up taxes. He also believes unemployment could start to creep upwards as a knock-on effect of the rapid slowdown in the housing market, with layoffs in the construction sector, followed by other firms dependent on a buoyant housing market, such as retailers, hotels and restaurants. With slowing government spending, falling house prices and rising unemployment, Bootle says the only cause for hope is that the Bank of England will have room to cut interest rates rapidly. 'I wouldn't say that a recession is likely, but I wouldn't dismiss it: you've got several key dangers, and they're interactive, so the Bank has a major role here. You've got to hope that they could fend it off.' money.guardian.co.uk