UK to remain in deflation trap until 2012, economists warn

Telegraph ^ | 3-21-9 | Edmund Conway

[Petronski]

UK to remain in deflation trap
until 2012, economists warn
Britain will be mired in a deflation trap for years despite
the radical efforts of the Bank of England to pump extra
cash into the economy, economists have warned.

By Edmund Conway
Last Updated: 10:26PM GMT 21 Mar 2009

The forecast, by a team at BNP Paribas, states that prices in Britain will keep falling for at least another two-and-a-half years, as Britain suffers an apparently intractable bout of debt deflation.

The warning comes only days before official figures confirm this Tuesday that the Retail Price Index has dipped into negative territory for the first time in almost half a century.

[Petronski]

Ping.

[Capt. Tom]

Have you noticed in the last year almost every revised prediction on the economy by various countries including ours is a more dire prediction. - Tom

Alan Clarke, UK economist at BNP Paribas, said: "Our revised economic forecasts for the UK are the most pessimistic in the market.

[Petronski]

Yes, except for the White House. They understate debt projections by orders of magnitude.

[Toddsterpatriot]

Britain will be mired in a deflation trap for years despite the radical efforts of the Bank of England to pump extra cash into the economy,

But a goldbug told me that more printed money means double (or triple) digit inflation.

[madameguinot]

Only if it is circulating.

[MSF BU]

Well if deflation occurs at least the COLA adjustments won’t be as bad; high inflation in the US could really be a problem to the extent pensions are adjusted yearly.