Economic Gloom Envelops Britain

Many economic analysts say Britain was in far worse shape during a recession in the early 1990s and the bleak economic times of high unemployment in the 1970s and early 1980s.

London is still home to one of the world's largest collections of the super-rich. But average Britons are increasingly sounding and acting like people feeling the pinch. "Gas is up, electric is up, rent is up, everything has gone up but our salaries," said Sue Johnston, 50, a Londoner who works in a bank.

Patrick Griffiths, 32, said his job as a corporate fundraiser has gotten much tougher. "There's a strange mood," Griffiths said. "People talk themselves into a recession. Companies spend less, people spend less, and it pushes us into a recession. There's a lot of fear and trepidation. . . . It's a weird atmosphere."

Griffiths said he's seen the price of beer, milk, bread and cheese steadily rise, but he's most worried about his mortgage. He said he and his wife are hoping to refinance their loan to lock in a fixed interest rate, but their options are fewer.

Miles Quest, a spokesman for the British Hospitality Association, said that fewer people are eating out and that more restaurants are offering two-for-one deals or a free glass of wine with dinner to lure them back. "People are more likely to choose a pizza or pasta dish over a steak dish," Quest said. "They may not order a bottle of wine, but instead a beer. There is some evidence people are trying to trade down."

"It's more than gloomy; a lot of people are fiercely affected," Peter Levene, chairman of Lloyd's, the London-based insurance giant, said in an interview. Levene said he believes that Britain's downturn is "very much an offshoot of the U.S. problems" and that the British economy will pick up after the U.S. economy does.

But in his view, Britons' "biggest worry is uncertainty. . . . There have been some glimmers of hope, but they don't last very long."

Things are getting so bad that many of the new economic migrants from Eastern Europe are packing up and leaving. The Institute for Public Policy Research in London has found that about half of the million or so migrants who arrived since 2004 have left, and that the exodus is picking up speed.

The institute's Laura Chappell said that as Britain's economy sags and Poland's booms, migrants increasingly see their jobs and opportunities at home. And she said a weakening British pound now buys just four Polish zlotys when it used to be worth seven.

The fact that the storied "Polish plumber" no longer wants to clear U.K. drains is adding to Britain's grumpiness. "You see it if you look at the tabloid press," Chappell said. "For the first time, instead of, 'Migrants are coming here and ruining things,' the headlines say, 'They are leaving just when we need them; they have no loyalty.' "

But for now, housing remains the primary concern in a nation obsessed with home ownership. "Our sense of well-being depends utterly on exchanging information at dinner parties about how much the value of our property has increased," said Feltz, the radio talk-show host. "It's a fetish here."

Housing prices have fallen an average of 10.5 percent in the last year, according to Nationwide, wiping nearly $40,000 off average house values. Standard and Poor's, the credit rating agency, predicts that housing prices will fall an additional 17 percent before leveling off in 2009.