No time for small measures, economists say

Jennifer Rudd/ December 4, 2008/ 12:12 p.m.

I wish this was not my last current event but it is and I will continue to research the United Kingdom and its global economy to see what happens. This past week, figures were released Wednesday painting an increasingly grim picture for Europe's service sector, with purchasing managers indexes for the 15-nation euro zone and Great Britain dipping to record lows, showing a further slowdown in activity. I have seen this continuing happening. Add in drooping consumer confidence, weakening euro-zone retail sales, and a fading British labor market, fears about the length and depth of recessions in the United Kingdom and the euro zone are on the rise. This week it seems as if things are worsening. I find this hard to believe the upcoming holiday. Consumer inflation in the euro zone could hit the ECB's annualized target of near but just below 2% as soon as this month. If inflation strengths, it could not be good for the country. The Bank of England's latest inflation report last month warned inflation could fall well below its 2% annualized target, and BOE Gov. Mervyn King has warned that deflation is a threat.

I believe that new plans need to be drawn up for the country and its economy. Big cuts can only do so much. For example, if a man just lost his job and they have not had a stable income and are not getting as much as they use to they are eventually going to go in debt. If the government continues to give big cuts and either low or higher interest rates the family is still in need of money. Few economists expect the ECB to deliver such a big cut. Surveys show a majority expect policy makers to reduce the key rate by another half point, although a sizeable minority expects a three-quarter point cut. Credit markets have largely factored in a reduction of three-quarters of a point, analysts said. New ECB staff projections due to be released Thursday will likely include significant downward revisions to growth and inflation forecasts for 2009. I find this to be the best news in the article.
Overall this article did not make me hopeful for the United Kingdom’s economic future. I ask myself every week, when is everyone going to be able to come out of this? I also ask myself why did things have to get this bad. Hopefully there will be solutions soon.
http://www.marketwatch.com/news/story/europes-central-bankers-expected-deliver/story.aspx?guid=%7B4995387B-7AE0-494F-97C5-A625DF772174%7D&dist=msr_1