UK economy in deflation
The World Bank believes that idle factories risk a deflationary spiral in many developed countries.
Capacity use has fallen to 72pc in Germany, 69pc in America, 65pc in Japan, and even 50pc in some developing nations.
Recent figures indicate that the UK economy shrank by 2.4pc in the first quarter of this year. This is a revised number down from the 1.9pc previously reported.
It shows that the UK is in a much worse downturn than many expected and so-called green shoots of recovery are probably isolated statistical blips.
Many forecasters are now turning away from the much-hyped V-shaped recovery pattern, and even a more leisurely U-shape, to a wobbly “W”, or double-dip delayed type of recovery.
It’s clear the British economy is still in freefall. As in the 1980s, the biggest decline has been in manufacturing. While the public sector has continued to grow, the makers of things have taken blow after blow.
The weakest sectors have been new housebuilding and car making.
This is beginning to look very serious indeed for UK industry and any company in the private sector.
