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Blair's boom is going bust
By Jane Padgham Economics Correspondent, Evening Standard Last updated at 00:00am on 04.05.05
Tony Blair and Gordon Brown have campaigned on the strenth of the economy
The economy is faltering, City experts warn today.
The prediction follows gloom over factory output and a crisis on the high street. One banker warns of a "real risk of recession".
The sudden note of pessimism comes the day before voting and as Tony Blair and Gordon Brown hail their economic record as the "central issue" for the election.
Poor sales from Matalan, HMV and French Connection follow a report from the CBI showing retail sales last month suffered their biggest fall since July 1992 - two months before Black Wednesday.
Retail monitor SPSL said 5.3 per cent fewer people visited shopping centres last month then a year earlier. This is the lowest April number since records began.
In another blow, the hotels and leisure group De Vere reports a downbeat Easter and warns of slower sales ahead. The gloomy news broke just as union officials met Marconi bosses amid fears it is to axe thousands of workers after failing to win a big BT deal.
Factory activity shrank in April for the first time in nearly two years. Many firms blame the collapse of MG Rover for a fall in orders.
Analysts said the economic outlook was deteriorating fast. "The economy is tipping over and there is a real risk of a high street recession," said John Butler at HSBC. "The challenges facing the economy are greater than at any time since the early Nineties."
Jonathan Loynes at Capital Economics said: "The outlook is worrying. Consumers have been riding on a wave of soaring house prices, low interest rates and borrowing, but are now tightening their belts."
Philip Shaw at Investec said: "The Prime Minister has called the election at the right time. In six months, the economy will look considerably worse." There was no hint of worry for Mr Blair and the Chancellor.
Mr Blair claimed a change of government would put jobs, homes and living standards at risk.
He said: "The strength of the economy now and in the future is the central issue of this election. And the central question is this: which party, Labour or Tory, is best able to run the economy? The choice is fundamental."
The Conservatives pointed to a YouGov poll that indicated that 65 per cent of businessmen interviewed thought their policies would be better for firms.
