LONDON (Reuters) - Prime Minister Gordon Brown is ready to borrow more to give the economy a much-needed boost, he said on Tuesday, following weak housing and retail figures that gave fresh indication of a deepening recession.
House sales reached their lowest level in at least 30 years and retail sales fell by the biggest amount in three years in October, data published on Tuesday showed.
The gloomy figures helped push trade-weighted sterling to a new 12-year low as investors shunned riskier assets amid expectations the Bank of England may lower interest rates again after its shock 1.5 percent cut last week.
Prime Minister Gordon Brown said he was ready to provide fiscal stimulus to help the economy recover from the financial crisis and he urged other countries to do the same.
“We need to have cooperative action across the world to achieve that and that means that each country must make their contribution,” he told a news conference.
“A fiscal stimulus means that you are prepared to add to borrowing in conditions where you have low national debt to enable the economy to move forward.”
Chancellor Alistair Darling will unveil the government’s spending plans in a pre-budget report due within weeks as union and business leaders warn of widespread job losses unless urgent action is taken to boost the economy.
Adam Chester, chief treasury economist at HBOS, said the housing and retail sales figures “confirm the downturn that’s taking place in the UK economy.”
“The housing market is linked to the consumer sector, so the weakening in house prices continues to come through,” he said.
Fears about inflation have now dissipated and economists await details of how much the Bank of England revises its forecasts in its inflation report on Wednesday.
The Royal Institution of Chartered Surveyors said the average number of home sales per surveyor over the three months to October fell to 10.9 -- the lowest since the series began in 1978 and 53.6 percent lower than the same period last year.
The figures reinforce a raft of evidence depicting a slumping housing market -- after a decade in which house prices trebled -- as the credit crisis drives Britain into its first recession since the early 1990s.
Separate figures from the British Retail Consortium showed that retail sales fell for a fifth straight month in October on a like-for-like basis.
“These are seriously poor numbers, especially in the run-up to Christmas,” said Stephen Robertson, director general of the British Retail Consortium.
However, the data showed online retail sales were holding up relatively well.
Britain’s goods trade deficit with the rest of the world narrowed more than expected in September as exports rose more than imports, possibly boosted by weaker sterling.
Brown’s handling of the economic downturn has given the Labour Party a boost. The latest opinion poll on Tuesday put him only six points behind the Conservatives, who unveiled tax cut plans on Tuesday.
Additional reporting by the UK bureau; editing by Patrick Graham
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