Economic Gloom Envelops Britain

Housing Market Tops List of Troubles

LONDON, Sept. 11 -- When Michele Greenman and her longtime boyfriend broke up, their heartache was compounded by the misery of Britain's sinking housing market.

Greenman, a legal secretary, and her banker boyfriend bought a house for the equivalent of about $730,000 early last year. But when they went to sell it a few months later, its value had fallen by $50,000.

They wanted to split up, but not to sell the house and absorb the financial loss. So for three months after their breakup, they lived together in an awkward and painful daily routine -- with him sleeping on the couch.

"It was awful," said Greenman, 29, who eventually moved out this year when he bought her share of the house.

As Britain endures its gloomiest economic times since the early 1990s, people across the country are making often-painful adjustments in the face of relentlessly grim economic news. House sales are at their lowest level in 30 years, new mortgage approvals are down 71 percent and bank repossessions of homes have nearly doubled over last year.

August new-car sales were the weakest since 1966. Britons are driving less and shopping more at discount grocery stores. According to the British Beer and Pub Association, pubs and bars are selling 1.6 million fewer pints of beer each day than a year ago.

Business bankruptcies in England and Wales are up 15 percent over last year, and the Federation of Small Businesses said 40 percent of its 215,000 members report they may have to lay off staff this year.

Much of Britain's problem has been imported from the United States through its subprime mortgage crisis. Steep rises in the price of oil and food haven't helped, either.

Both the European Commission and the 30-country Organization for Economic Cooperation and Development have concluded in recent days that Britain is headed for recession this year, or two consecutive quarters of economic contraction.

"It's proper gloom-and-doom recession country; people are in absolute shock," said Vanessa Feltz, a popular radio talk-show host on BBC London who spends three hours every day chatting with listeners on the air. "There is a very uneasy, troubled, nasty feeling, and I don't think it's going to get better anytime soon."

Chancellor of the Exchequer Alistair Darling, Britain's finance minister, caused a huge stir two weeks ago when he said that the country's economic conditions were "arguably the worst they've been in 60 years" and that the effects would be "more profound and long-lasting than people thought."

Darling's predictions were immediately slapped down by Prime Minister Gordon Brown, who is fighting to keep his job as his approval ratings dip as low as 14 percent amid growing dissatisfaction with the economy. Brown has repeatedly declared himself "cautiously optimistic" about the British economy.