Banking woe

Evening Chronicle (Newcastle, England), Oct 22, 2008

BANK of England Governor Mervyn King became the first major public figure to warn of a UK recession as he said the economy faced a "long, slow haul" to repair the damage from the credit crunch.

He told business leaders that the combination of lower take-home pay and reduced lending posed "the risk of a sharp and prolonged slowdown in domestic demand".

"It now seems likely that the UK economy is entering a recession," Mr King said.

Mr King also said country's banking system came closer to collapse during recent weeks than at any time since the First World War.

Meltdown was threatened after an "almost unimaginable" chain of events set in train by the collapse of Lehman Brothers in September, he said.