BRITAIN IN CRISIS – AT 10:25 A.M. ET: The London Olympics begin Friday, but Britain is experiencing a severe economic crisis, apparently worse than forecast. From today's Telegraph:
The UK economy has shrunk by a shock 0.7pc in the second quarter, far more than expected as record rainfall and the Jubilee holiday added to pressure from austerity cuts and the eurozone debt crisis.
The figures from the Office for National Statistics are much worse than forecasts for a 0.2pc contraction.
It marks the third successive quarter of contraction, leaving Britain in its longest double-dip recession in more than 50 years. The economy shrank by 0.3pc in the first quarter of the year, following a 0.4pc contraction in the final quarter of 2011.
The news will increase pressure on Finance Minister George Osborne to ease up on his austerity measures and push for growth.
The Chancellor called the deeper-than-expected contraction disappointing and confirmed the country's deep-rooted economic problems.
"We're dealing with our debts at home and the debt crisis abroad. We've made progress over the last two years in cutting the deficit by 25 per cent and businesses have created over 800,000 new jobs," he said in a statement.
"But given what's happening in the world we need a relentless focus on the economy and recent announcements on infrastructure and lending show that's exactly what we're doing."
COMMENT: This news will affect us here. A weak Britain means fewer imports from America. It means Britain will inevitably spend even less on defense, with the U.S. having to take up the slack. It means greater economic weakness in Europe, which is already weak.
I fear we are also going into a double dip recession. And look who's in the White House? A Mr. Fixit he is not.
July 25, 2012