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UK economic crisis worst in 60 years, warns chancellor


London : Britain is in the grip of its worst economic crisis for 60 years, Chancellor of the Exchequer Alistair Darling warned Saturday.

The crisis is going to be “more profound and long-lasting than people thought,” Darling said in what was seen as the most astonishing admission about the economic situation facing the country following a string of bleak assessments.

In an interview with the Guardian newspaper, he also acknowledged that the British public was disenchanted with the government and said the ruling Labour Party must recover the “zeal” which won it three successive general elections.

The UK has been hit hard by a credit crunch that started to hit Western countries last year with the pound continuing its recent slide, reaching a 12-year low on a trade-weighted basis on Friday with as evidence mounting the UK economy is heading for recession.

The economic times “are arguably the worst they have been in 60 years,” the chancellor said.

“I think it’s going to be more profound and long-lasting than people thought,” he warned.

“This coming 12 months will be the most difficult 12 months the Labour party has had in a generation, quite frankly,” he told the daily.

Inflation in Britain is currently double the Bank of England’s target of 2 per cent as households have been facing huge increases in fuel and food bills.

A report has also shown that house prices have dropped 10 per cent in the last month, the biggest fall since 1990, while on Thursday David Blanchflower, a member of the Bank of England monetary policy committee, warned unemployment would hit two million by Christmas.

Projects are that the value pound, which has dropped by more than 7 per cent against the dollar to since the beginning of August, will fall even further and will be the worst-performing major currency over the next year.