I want to give you good news, but….
Today it’s the UK that is facing slower growth than expected. Between April and June, the UK economy grew by just 0.1%, less than the 0.2% which had previously been estimated. This latest GDP revision raises further questions about the strength of the fragile economic recovery, further exacerbated by household consumption falling by 0.8% over the same period.
This news comes on top of Moody’s cut to Italy’s credit rating (from Aa2 to A2), providing a fresh warning about the country’s inability to pay it’s debts. Italy had already been downgraded by ratings agency Standard & Poor’s a couple of weeks ago. In Greece, a new general strike is under way in protest over the nation’s (very necessary) austerity measures. Flights, ferry services, schools, government offices hospitals and tourist sites are all affected.
Across the Atlantic, US Federal Reserve Chairman Ben Bernanke has told Congress that the US economy is “close to faltering” and that more action is likely to be required. He pointed towards the eurozone debt crisis and ‘overly hasty’ spending cuts by the federal government as key drivers to further undermining the US economy. The ‘action’ that Bernanke referred to included: giving a clearer indication of how long interest rates will be held close to zero (and what triggers would prompt a rise); increasing quantitative easing; and cutting the interest raid paid by banks on cash held at the Fed.