British economy 'is facing a bumpy ride' - papers 17th January

According to the Financial Times, Mervyn King, Bank of England governor, has warned of the threat of a rise in long-term interest rates and a fall in the price of assets such as shares and housing. King highlighted the unusually low level of long-term real interest around the world, in a speech last night. In the UK, for example, he said the interest rate on a 20-year index-liked government bond was 1%, well below the typical real rate of interest over the past 25 years of 2-4%. He said there could be two main reasons why long-term interest rates around the world were so low. One was ...