If our report of earlier in the week wasn’t bad enough about the British economy, more figures have come to light that suggest it’s almost in free fall, so rapid is the downturn. It’s a slump that is being repeated in more and more of Europe. The Irish economy is moving closer to recession, and now economists say that Denmark, Portugal, Italy and Spain are hovering on the brink as the European Central Bank prepares to lift rates tonight (our time) by 0.25% to 4.25%. That rate decision could very well change the dynamics of markets here, in Europe, the US and Asia. A rate of 4.25% from the ECB, compared to 2% from the US fed, has the potential to cause more damage to the US dollar, drive commodity prices even higher, especially oil, and further boost inflation. Commodity prices moved up sharply overnight with oil above $US144 a barrel, copper hitting a ...

By Jennifer Yousfi Managing Editor Odds of a future rate hike for the European Central Bank (ECB) increased yesterday (Monday) on news that Eurozone inflation hit a 16-year high in May. With inflation accelerating “it becomes increasingly difficult to argue against an ECB hike in July,” Carsten Brzeski, an economist at ING Groep NV (ADR: ING) in Brussels, told Bloomberg News. Soaring food and energy costs pushed inflation up 0.6% in May to an annualized rate of 3.7%, an increase from April’s 0.3% monthly rate and 3.3% annual rate. High commodity costs fueled the increase, as food costs shot up 6.4% in May, up from 6% in April. Energy prices soared 13.7% year-over-year on the back of record high oil, up from a 10.8% increase the prior month, the European Union’s Luxemburg-based statistics office said. Story continues below…...