The British economy moved a step closer to recession on Tuesday after more dismal data showed home sales halving and manufacturers planning to slash output and jobs as their confidence dwindled to a 28-year low. The Confederation of British Industry said factory orders slumped in October and 65,000 jobs could disappear by the end of the year as firms expected output to fall at its sharpest pace since July 1980, when Britain was in a deep recession. “The plunge in orders, output and confidence is so sharp that it raises risks that the recession will be really severe,” said Michael Saunders, economist at Citigroup. Analysts say the economy will almost certainly have shrunk for the first time since the early 1990s when third GDP quarter figures are released on Friday - Q4 could be even worse as the financial crisis became most severe at the end of Q3. The CBI survey's quarterly business situation balance fell 20 points to -60 in October, its lowest since July 1980 when the British economy was in the middle of a painful recession. Other economic news on Tuesday was just as gloomy. The number of properties changing hands crashed 53 percent on the year last month, according to government data, as the housing boom has turned to bust in the face of a global credit crunch. Two of Britain's biggest clothing retailers, Arcadia and Debenhams, reported profits falling fast as consumers cut back their spending. And Japan's Nissan Motor Co said it would halt production at its plant in Sunderland, north-east England, for 2 weeks due to a slide in sales of its Micra and Note models. Later on Tuesday, Bank of England Governor Mervyn King will give his first public reading on the economic outlook since the central bank made an emergency cut in interest rates earlier this month because of the global financial crisis. Most economists expect the BoE will cut rates again next month by another 50 basis points to 4.0 percent even though inflation hit a 16-year high of 5.2 percent in September, more than double the central bank's target. The government is hoping its multi-billion pounds bank rescue package will get mortgage lending and loans to small businesses flowing again, and so protect the economy from the worst effects of the credit crunch. It has also signaled it will borrow more despite public borrowing in the first six months of the financial year already hitting the highest level since just after World War Two. The number of homes sold in Britain plunged in September while demand for goods manufactured in the country fell at its fastest rate in nearly a decade.
