2 September, 2008

In an interview with the Guardian newspaper, Chancellor Alistair Darling revealed that economic conditions have turned negative in UK for last 60 years and it is expected to have its long lasting effect on the economy.

This warning comes from Mr Darling, after the Nationwide released that the average house price fell by 10.5% over the last year and is the fastest drop since 1990.

Moreover, a member of the Bank of England’s Monetary Policy Committee advised that two million people can turn to be jobless by Christmas. Meanwhile, last week the CBI has reported the weakest high street activity in 25 years.

Food and petrol prices continue to gain while an increase in fuel costs mean millions of families may face shortage of fuel.

Recently Mr Darling admitted that he was challenged by the motorists at a petrol station as they are under pressure with the rising cost of petrol. The motorist asked Mr Darling about his strategy to solve such critical situation.

Shadow chancellor George Osborne has criticised Mr Darling for his severe assessment and said he had ‘let the cat out of the bag’ about the state of the economy. However, Mr Darling defended his evaluation and said it is his duty to be honest with the public.

The sluggish economy means Labour faces its strongest challenge since the 1980s. Mr Darling said the next year would be the most crucial time for the Labour party as they had in a generation. However, Justice Secretary Jack Straw, revealed that the Labour is best placed to see Britain through the current economic depression.

In an interview with Andrew Marr on BBC One, he pointed out that the Labour would help the UK to ‘weather these storms’. Mr Straw defended the Chancellor by saying he had not spoken out of turn.

Earlier this month, delivering the Bank of England’s August Inflation Report, Mervyn King said the next year is to be a toughest one, with rising inflation rate and output broadly flat. Mr King declined to rule out the possibility of a slump.

The UK’s annual rate of inflation surged to a record, gain of 4.4% in July and is at the top level since current records began in 1997.