The latest economic data have been pretty awful. Output in the industrial sector is plummeting in response to weakening global demand. What’s more, there is only limited evidence so far of a boost to consumer spending from falling inflation. With the labour market downturn gathering pace, the consumer sector will probably do little to offset the weakness of industry. Another sharp fall in the EC Economic Sentiment Indicator in December left it pointing to annual falls in GDP of 2% y/y and we expect a decline of at least this magnitude in 2009 as a whole.
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