British Economy in for a “Horrible Surprise”

British analysts paint a bleak picture for the future of the United Kingdom’s economy. Tens of thousands of workers could lose their jobs as the UK falls into a recession this winter, the Bank of England’s monetary policy committee’s David Blanchflower testified last week.

A “horrible surprise” is coming, Blanchflower told the Treasury select committee, predicting that unemployment will rise by 60,000 per month for several consecutive months, probably starting in October. “I believe we will see a deeper economic decline than other people think,” he said.

A few weeks ago, a Bank of England monetary policy committee member warned that house prices could fall by around 30 percent before the end of the year.

Already the numbers are not good for Britain. The pound has fallen to its lowest value in 2½ years against the dollar, at $1.75 to the pound. Unemployment has risen by over 20,000 a month for the past three months, the biggest jump since the early 1990s. In August, unemployment rose by 32,500, the largest increase since December 1992.

Both Blanchflower and the Confederation of British Industry are predicting unemployment of around 2 million by the end of the year, a jobless rate of around 6.5 percent.

With the global—and especially the U.S.—economy shaking, many are worried. Lehman Brothers is in bankruptcy, aig has been rescued by the U.S. government, Merrill Lynch is in difficulty, and rumors are flying that Halifax Bank of Scotland Group is on the brink of collapse. Speculation abounds as to whether Britain will see a slight fall in growth, a recession or an outright crash.

For years the Trumpet has forecasted a major crash, one of the biggest in history. It is a big claim. After all, major companies have fallen before, without causing catastrophe. What we are predicting is far more than a repeat of 1991, 2001, or even 1929. The troubling data currently appearing represent just the start of a gigantic crash. How do we know? For all the background and history of the Trumpet’s forecasting, see our article “Years of Economic Forecasting Coming to Pass.” Britain, and the whole world, is in for a “horrible surprise,” before things get better.