The UK jobs market is heading downhill at breakneck speed

The reason for the drastic fall in the pound is the state of the British economy. “The outlook for the British economy is particularly dire,” the Economist warned, “because it has been hit so hard by the banking crisis.” As a result, “Lending to the sectors that matter—households and non-financial companies—has essentially stalled since the summer.”Lending has dried up because banks are attempting to shrink their balance sheets so that they can stay in profit. But the effect of every bank doing this is to send the whole economy into a further downward spiral. The banks are shifting the risk from their own balance sheets to other companies and to working people who lose their jobs and homes.Recent economic data has pointed to Britain entering a deeper recession, and at a more rapid rate, than was expected. Recent surveys of manufacturing, services and construction show that British gross domestic product (GDP) is falling by 0.8 to 0.9 percent in the fourth quarter, as compared to 0.5 percent in the third quarter.
House price inflation was one of the results of the flood of money into the UK. Britain came top of the house price inflation league of industrialised countries earlier this year. The fall has been correspondingly dramatic. Prices have fallen by 18 percent since their peak last year. The average house price fell by £144 a day in November.The fall in house prices has not made it easier to buy a home. According to Bank of England figures, just 32,000 new mortgages were approved during November. The monthly average in 2007 was 104,000.

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