hr: Money

Photo Credit: c3lsius_bb

For the first time in a period of five years, UK services, ranging from banks to airlines, contracted all of a sudden and unexpectedly while consumer confidence plummets to the lowest level ever counting from the year 2004. This, experts say, is an indicator that the economy is coming closer to a recession.

Approximately 700 service companies’ indices in May fell to 49.8 — values less than 50 indicate contraction. The consumer sentiment index of Nationwide Building Society fell 1 point and is now 69, which the lowest level counting from May 2004.

The British pound slipped back versus the euro following reports that revealed services companies have been on the fastest job cutting spree since 1996.

Meanwhile the Bank of England is studying the pros and cons of cutting interest rates as hedge against the whirlwind inflation that is working against cutting of borrowing costs.

The report points to the fact that the British economy has weakened tremendously since the previous recession the country has experienced. It is the services sector that is on the receiving end of the blow brought about by the sharply slowing economy.

Consumers are the ones hurt the most, in the midst of worsening housing market conditions that’s bleeding them dry. This has negatively affected their willingness as well as ability to spend.