Darling warns of economic crisis

Posted by admin on 29 August, 2008 under Business news, Credit crunch | Be the First to Comment

The UK is facing its worst economic crisis in 60 years, Chancellor Alistair Darling has admitted.

He told the Guardian newspaper that the economic downturn would be more “profound and long-lasting” than most people had feared.

Using strong language, Mr Darling acknowledged voters were angry with Labour’s handling of the economy.

Ministers are expected to announce a package of measures next week to kick-start the moribund housing market.

Voter anger

House prices are falling at their fastest rate in 18 years, leading to fears of a wave of repossessions in the upcoming months.

Mortgage lending has slowed dramatically due to the credit crunch while key indicators have suggested that the economy could be poised to go into recession in the near future.

The economy showed no growth in the second quarter of the year while building firms and retailers have laid off thousands of staff in recent weeks amid fears that the economy will deteriorate further.

A member of the Bank of England’s Monetary Policy Committee said on Friday that radical action was needed to ensure the crisis did not get worse and warned of a sharp rise in unemployment.

In his interview, the Chancellor admitted the government had failed to get the message across that it understood people’s concerns about rising living costs and growing job insecurity.

He said that voters were “pissed off” with Labour’s handling of the economy, a key issue at the next election.

The Chancellor has been criticised for sending contradictory signals over possible measures to assist homebuyers, particularly the prospect of a temporary suspension of stamp duty on home purchases.

News reported by The BBC