Many got burned in the last recession and so they are being careful. But the danger is that we could end up talking ourselves into recession.” Smith’s comments follow similarly gloomy forecasts by Marks & Spencer and Boots lasts week.
Smith’s said sales of books had stabilised after a period of losing market share. Richard Handover, Smith’s chief executive, said: “What we are seeing is people being very cautious. WH SMITH yesterday become the latest retailer to report a slowdown in sales as a result of weakening consumer spending. It said underlying sales growth had slowed to 1 per cent in September and October. This compared to growth of 3 per cent in the three months to 31 August.

Smith’s attributed the fall to fewer customers on the high street as customers rein back spending because of fear of recession. January or February seem more likely bets.”Mr King said uncertainty about the reliability of average earnings data meant there was “considerable uncertainty” about the Bank’s inflation forecasts. Publication of the average earnings index – scheduled for yesterday along with the unemployment figures – has been suspended until an inquiry into the series has been completed.The unemployment data showed that the claimant count rose by 6,800 in October, while the ILO jobless measure – a broader measure of unemployment – rose by 3,000 in the three months to September.Hamish McRae, page 22. Michael Saunders at Salomon Smith Barney/Citibank said: “Given the MPC’s forecasts, a December cut now seems unlikely unless new global shocks materialise.

In August RPIX – the underlying rate of inflation targeted by the Bank – was forecast to peak at around 3 per cent early next year before falling towards target by summer 2000.Now the Bank believes inflation will peak at around 2.8 per cent next year – primarily because of one-off effects associated with the introduction of the minimum wage – and will quickly return to target.By the middle of 2000, inflation could fall below target, the Bank said, prompting analysts to speculate that interest rates would come down again, although possibly not until next year. Mark Wall of Deutsche Bank said: “We believe the Bank is too optimistic on the outlook for the economy and in order to avert a full-blown recession, we expect the Bank to reduce interest rates to 5 per cent by the end of the year.”The Bank’s central projection is that growth in gross domestic product (GDP) will slow to around 1 per cent next year, before rebounding in 2000.At the press conference following the release of the report, Mr King stressed that although the Bank’s Monetary Policy Committee did not think recession was the most likely outcome, risks to activity “remained on the downside”.The Bank also cut its forecasts for inflation. To the City’s surprise, however, the Bank produced similar forecasts to those released by the Treasury in the pre-Budget report.Several analysts said that both the Bank and Treasury were painting too rosy a picture of economic prospects. THE PROSPECT of another cut in UK interest rates before Christmas faded yesterday after the Bank of England’s quarterly economic assessment proved less gloomy than feared.

In its regular inflation report, the Bank cut its forecasts for both economic growth and inflation, and said there was now a one-in-four chance of recession next year. Mervyn King, deputy governor of the Bank, warned that unemployment was likely to rise over the next 12 months.
City analysts said yesterday’s jobless figures – which revealed increases in both key measures of numbers out of work for the first time in almost six years – could mark the beginning of a sustained period of rising unemployment.Despite the warnings on unemployment and growth, the overall tone of the Bank’s inflation report was less gloomy than the City had expected, prompting a rise in the value of leading company shares The FTSE 100 closed up 44.5 points at 5,476.8. Traders said a string of better-than- expected company results helped sentiment.The pound spiked upwards against the Deutschmark following the release of the report, but fell back to close down over a pfennig at DM2.787.Analysts were braced for a downbeat report from the Bank and deep cuts to growth forecasts following last week’s larger-than-expected 0.5-point cut in UK interest rates. In an unprecedented publication of research, from over 80 studies around the world, The Journal of the American Medical Association called on doctors to subject such practices to the rigours of science.
One study showed visits to alternative practitioners were up by 50 per cent since 1990 and four out of every 10 Americans used some form of alternative medicine, spending $27bn on the services last year.The Journal said chiropractors cannot help relieve tension headaches, but Chinese herbs can help an incurable bowel disease. Rolling the herb artemisia into a cigar shape, setting it on fire and holding it close to the little toe of the woman was said tostimulate an acupuncture point on the toe that increases fetal movement, helping the baby to swim around into the proper position to be born.. Acupuncture did not help HIV sufferers, but an unusual Chinese practice helped breech babies to an easier birth.