by Gary Duncan, Economics Editor
Thousands of jobs were lost yesterday, house prices slumped again and shares
hit a new low as recession loomed larger over Britain.
Consumer confidence has fallen to its lowest ebb in years. A poll by
Nationwide Building Society shows that more than half of households believe that
the economy will be in a worse state in six months’ time.
The grim news increased pressure on the board of the Bank of England to help
borrowers by cutting interest rates tomorrow. It is expected to defer any cut
for several months.
The Council of Mortgage Lenders said that new lending in May was down 44 per
cent on the previous year. The property group Savills reported a 45 per cent
drop in sales in London.
Bradford & Bingley, the biggest buy-to-let mortgage lender, saw its
shares fall to a record low of 30p from a peak of 539p in March 2006.
Persimmon, the housebuilder, announced yesterday that it was cutting its
staff by 1,100 as it confronted the most challenging period in its recent
history. The construction industry is in crisis and Persimmon’s rivals, Taylor
Wimpey and Barratt Developments, have cut 2,000 jobs already.
Total unemployment has climbed by more than 20,000 since February. Roger
Bootle, one of the City’s most respected economic experts, predicts that
unemployment could eventually surge by one million.
Siemens, the German engineering conglomerate, announced that it would shed
17,000 jobs worldwide.
The stock market reflected the darkening mood. The FTSE 100 index of
blue-chip shares entered a “bear market”, trading 20 per cent below its peak
last June. Shares recovered from the day’s low point, but traders are braced for
a period of sustained losses.
A survey of businesses by the British Chambers of Commerce showed that
conditions in the services sector, which makes up three quarters of the economy,
are at their worst since the last recession in the early Nineties.
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