The European Central Bank will lift rates Thursday night. The Bank of England has no idea what to do as that country’s economy slumps closer to recession. Now there’s a forecast that Ireland will be the first economy in the Eurozone to tumble into recession in coming months as retail sales, building and construction and tax revenues slump. Closer to home, New Zealand is heading towards recession territory with the NZ Reserve Bank likely to be forced to cut rates sooner than later.

Meanwhile, our Reserve Bank meets today and will sit on its hands. If nothing else, the global financial house of cards is getting more jittery, virtually by the day.

With Eurozone inflation hitting an annual rate of 4% in May, double the top of the ECB’s target range, the warning last month of a “small” increase at this week’s meeting from the central bank’s boss, Jean Claude Trichet, will come to pass. It was the highest inflation reading since the Eurozone was formed back in 1999. Not to increase rates, after so publicly signalling the intention, would seriously damage the ECB’s credibility.

The inflation reading came as oil hit a new intra day record high of $US143.67 a barrel and commodities recorded their largest first half of the year price jump for at least half a century. Oil prices, however, retreated as the US dollar turned against the Euro and oil actually fell 21 cents on the day to end at $US140 a barrel in New York.

While the NZ and Irish economies are tanking, they are only marginal indicators of a wider trend. But the slump overtaking the UK is notable day for several reasons.

The country’s biggest home builder, Taylor Wimpey, was rescued by an emergency share issue to a number of larger existing and new investors that will raise just over $1 billion, and the company wrote off around $1.4 billion from the value of property assets: it will reveal the full gory detail Wednesday in London.

We’ve already seen some of Britain’s big banks (Barclays, Royal Bank of Scotland, HBOS) raise more than $40 billion in fresh capital through issues and asset sales. Northern Rock, which was the country’s fifth biggest bank, was nationalised after collapsing and the eighth biggest bank, Bradford and Bingley, is struggling to survive as shareholders argue over the merits of two proposed rescue deals.

And a flood of poor results yesterday swung the spotlight onto corporate Britain.

Trinity Mirror, the owner of the Daily and Sunday Mirror titles and other assets revealed soft revenues, falling profits and a possible dividend cut and the shares dropped sharply. Shares in Britain’s biggest aged care service provider, Green Care, lost more than 50% of their value after the company revealed earnings problems and it had been forced to ask its banks to waive their controls on its loans.

But wait, there’s more. Pendragon, Britain’s biggest car dealer, experienced a similar fate with the shares also dropping sharply. The Bank of England reported that home loan mortgage issuance slumped dramatically in May to be 28% down from April and a massive 64% lower than May 2007. And figures from a company that follows house sales showed a ninth successive fall in UK housing prices, with a 1% drop from April to May.

But the UK stockmarket isn’t fully reflecting the slump in the economy, because like Australia’s, the main index, the FTSE 100, is dominated by resource companies: BP, Shell, BHP Billiton, Rio Tinto, Xstrata and a host of others. It’s why the UK market, as measured by the Footsie (as it is called) is down 17% over the past year, a performance similar to the resource share-dominated Australian market.

That’s why the London market jumped 96 points, or 1.7% on the FTSE 100 overnight because of speculation that the giant ArcelorMittal steel group (which is also in the index), the world’s largest, might join the bid for Rio, and several other rumours deals.