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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (21284)	7/5/1998 9:17:00 PM
From: Haim R. Branisteanu	Respond to of 94695

Economists warn over 'stagflation' By Helen Dunne, Associate City Editor AN economic think-tank warns today that the UK economy is getting into a position which is "uncomfortably close to stagflation" where rising wages and strong consumer demand co-exist with a depressed manufacturing sector and an overvalued pound. The warning from the Centre for Economics and Business Research comes just days before the Bank of England's monetary policy committee meets to assess the current level of interest rates. The centre predicts that the economy will grow at just 1.6pc this year, which is roughly half last year's growth rate of 3.1pc. Next year is also expected to see sub-trend growth of just under 1.8pc. Chief executive Doug McWilliams said: "Although the economy as a whole is cooling, output may be at a level inconsistent with the government's 2.5pc inflation target for many months yet. We expect underlying inflation to stay above 3pc for the remainder of 1998, keeping the fingers of the Bank of England's monetary policy committee on the interest rate trigger. Base rate cuts are now unlikely until well into next year." Mr McWilliam's forecast is likely to add to the despondent mood of Britain's business world, which is today revealed in two separate economic surveys. Tim Melville-Ross, director-general of the Institute of Directors, said businessmen were "increasingly depressed" about successive rises in interest rates and the continuing financial crises in south-east Asia. The institute's quarterly survey showed that export orders have fallen, jobs growth was worse than expected and that manufacturers are particularly pessimistic. The London Chamber of Commerce's quarterly survey reveals that service-sector exports have fallen to the lowest levels since 1991 and that 81pc of businessmen want a weaker pound to revive exports. 5 July 1998: Cash flow problems on the rise