House sales in Britain reached their lowest level in at least 30 years and retail sales fell by the biggest amount in three years in October, further signs the British economy is heading for recession, figures showed today.
The gloomy data helped push trade-weighted sterling to a new 12-year low as investors shunned riskier assets amid expectations that the Bank of England may lower interest rates again after its shock 1.5 per cent cut last week.
"The numbers confirm the downturn that's taking place in the UK economy," said Adam Chester, chief treasury economist at HBOS.
"The housing market is linked to the consumer sector, so the weakening in house prices continues to come through."
Fears about inflation have now "evaporated" and economists are waiting to see by how much the Bank of England revises its forecasts in its inflation report on Wednesday, he added.
Meanwhile, Britain's goods trade deficit with the rest of the world narrowed more than expected in September as exports rose more than imports, official statistics showed today.
Ross Walker, economist, RBS Financial Markets, commented: "The headline numbers are quite a bit better than expected. It's overwhelmingly an improvement in oil and erratics which suggests that we shouldn't start celebrating just yet."
British prime minister Gordon Brown has said his government could cut taxes to help stimulate the economy, which he has warned is likely to slip into recession.
His finance minister Alistair Darling will unveil the government's spending plans in a pre-budget report in the coming weeks as union and business leaders warn of widespread job losses unless urgent action is taken to boost the economy.
The Royal Institution of Chartered Surveyors (RICS) blamed a lack of home loans caused by the financial crisis for a "major blockage" in the housing market.
RICS said the average number of sales per surveyor over the three months to October fell to 10.9 from 11.5 - the lowest since the series began in 1978 and 53.6 per cent 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.
Total sales values, which is a guide to the growth of the whole retail industry, were lower than a year ago for the first time since April 2005, falling 0.1 per cent.
"These are seriously poor numbers, especially in the run-up to Christmas," said Stephen Robertson, director general of the British Retail Consortium.
Reuters