Bank of England Governor's Reality Check: Admits Recession Looming

15 August 2008

LONDON: The problem that dare not speak its name was finally mouthed by Mervyn King, Governor of the Bank of England, who on Wednesday spoke the politically dreaded 'R' word. Recession.

This unhappy state – technically two quarters of negative GDP – last happened in 1992 and, admitted King, is now "more than possible".

“It is bound to be the case there will be a quarter or two of negative growth,” he said. “Oil prices are at the highest level in real terms at any point in the post-war period apart from the late 1970s, and we've also seen the biggest financial dislocation since the Second World War.

"What is unique about the present set of circumstances is that both shocks have happened at the same time, and the combination has meant that life is extremely difficult, and will be for the UK economy over the next year.

"There is a feeling of chill in the economic air," he said while presenting the Bank's quarterly Inflation Report.

King cut his forecast for the nation's growth, acknowledging that by the end of this year the economy will be shrinking rather than expanding.

"It ain't nuffink ter do wiv us, guv," hastily chipped-in politico Alistair Darling, UK Chancellor of the Exchequer.

Well, not precisely in those terms.

What he actually said was: "As both the Government and the Bank of England have recognised, the UK, like other economies, is seeing the consequences of globally high energy and food prices."

Or as Humpty-Dumpty's put it to to Alice: "When I use words they mean just what I choose them to mean, neither more nor less."

Data sourced from; additional content by WARC staff