British manufacturing marches into triple-dip

Production in Britain is at its lowest level since 1992, sparking fears of higher inflation.

British data produced a nasty surprise this week. Manufacturing output fell by 1.5% in the month of January. Total industrial production, which includes mining and utilities as well as manufacturing, slid by 1.2%. Production is now at its lowest level since 1992.

Expectations of yet another downturn and more money printing by the Bank of England spread, sending the pound to a near-three-year low against the dollar. Bond prices showed that investors' inflation expectations had risen to their highest level since September 2008. Markets now expect inflation of 3.3% over the next few years.

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