/24-7PressRelease/ - LONDON, UK, May 04, 2008 - Britain's economy is in its worst 'precarious position in over a decade' because of the credit crunch. The National Institute of Economic and Social Research supported this statement.
Fresh evidence of the scale of the downturn in the UK emerged yesterday as government figures revealed home construction orders fell off a cliff in last month, slumping to 420m. This figure is the lowest in over seven years. Manufacturing output also sagged in April2008 , falling to its lowest level since 2005, according to the monthly CIPS report. Prices charged by factories rose to a record high, further complicating the inflation scenario.
The downturn will put particular pressure on the strained public finances and will drive the government tax revenues down. Growth of Britain's economy will fall to 1.8% next year, well below Chancellor Alistair Darling's 2.25% baseline forecast. As a result, the Treasury will be forced to hike taxes by as much as 9bn in the next year, Niesr said.
The banking meltdown has been so severe that many Western economies including the UK have been pushed 'to the brink of a large-scale recession,' Niesr went on.
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