Recession likely, Bank of England governor admits

22/10/2008

The governor of the Bank of England has said for the first time that the economy is likely to enter recession.

Mervyn King said in a speech yesterday that the recent economic downturn, caused by the credit crunch, is set to worsen.

However, he also suggested that the government's bank rescue plan - which will see £37 billion of public money spent on buying up shares in struggling financial firms - was beginning to work.

Mr King said: "We are far from the end of the road back to stability, but the plan to recapitalise our banking system, both here and abroad, will I believe come to be seen as the moment in the banking crisis of the past year when we turned the corner."

He added: "We cannot assume that there will not be problems in other parts of the financial system and in some emerging market economies to be overcome before the crisis can truly be described as over."

A recession is commonly defined as two consecutive three-month periods in which a nation's economy shrinks.

The last one to affect the UK occurred in the early 1990s.

Tags; Current UK Economy, Young Family Finances, Retirement Money Problems,

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