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Posted 31 August 2008 - 12:28 AM
Edited by SilentOne, 31 August 2008 - 12:36 AM.
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Posted 31 August 2008 - 12:42 AM
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Posted 02 September 2008 - 06:11 PM
Recession fears: Markets reel from Darling downturn talkAgainst the dollar, sterling fell more than 1% to its lowest level since April 2006
Julia Kollewe guardian.co.uk, Monday September 01 2008 09:30 BST
The pound hit a record low against the euro this morning and stocks also fell in London after a stark warning from Alistair Darling, the chancellor, that the economic downturn would be worse and longer than expected.
Measured against a basket of trade-weighted currencies, the pound is now at a 12-year low. The FTSE 100 index dropped 42.9 points to 5593.7 points in early trading, down 0.76%.
"Most people believed that things were probably deteriorating faster in the UK than the government was admitting, but the fact that we've seen the chancellor come out and admit that things are far worse have put sterling under pressure," said Ian Stannard, senior currency strategist at BNP Paribas.
In an interview with the Guardian, the chancellor said Britain is facing "arguably the worst" economic downturn in 60 years and predicted it would be "more profound and long-lasting" than people had expected.
Adding to the gloomy picture, a CIPS survey showed today that the manufacturing sector shrank for the fourth month in a row.
Mortgage approvals fell to 33,000 in July, the lowest since the data series began in 1993, according to Bank of England figures released this morning. House prices fell in August for the eleventh consecutive month, according to a separate report from property consultants Hometrack.
The pound slid to 81.39p against the euro, its lowest point since the single European currency was launched in 1999. Against the dollar, sterling fell more than 1% this morning to $1.8005, its lowest level since April 2006. The pound also hit a five-month low against the yen, of ¥195.15. Gilts and short sterling futures rose sharply, pushing down yields.
"The market is clearly worried by what Darling has said," said David Page, an economist at Investec. "His views aren't a million miles away from the Bank of England's."
The Bank of England's deputy governor, Charles Bean, last week warned that the economy is facing a period "at least as challenging" as the 1970s when Britain sank into a deep recession.
Darling said at the weekend that the economic backdrop presents Labour with its toughest challenge since the 1980s. "We've got our work cut out. This coming 12 months will be the most difficult 12 months the Labour party has had in a generation."
His comments came after a Bank of England policymaker, David Blanchflower, warned of 2 million unemployed by Christmas.
Investec's Page predicted that worries about the health of the public finances and the economy overall would put the pound under further pressure over the next month, when the political party season gets under way and ahead of the chancellor's pre-budget report. But looking further out, the City's view that the Bank will probably hold off cutting interest rates until next year - because of soaring inflation - "should provide a floor to sterling", he said.
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Posted 02 September 2008 - 06:16 PM
Darling: 'UK can ride storm'
Published: Tuesday, 2 September 2008, 1:04PM
Alistair Darling says he is optimistic the UK can ride the current economic storm despite his comments which rattled financial markets.
Mr Darling gave an interview to a weekend newspaper which made for bleak reading and has been blamed for Monday's sharp fall in sterling resulting in a record low against the euro.
The Chancellor has since said: "As I said at the weekend, we face a unique set of circumstances that we have not seen in generations where you have a credit crunch and you have high oil and food prices.
"But I remain optimistic as I have said on many occasions before that we can get through and we will get though it and today's measures helping the housing market are one example of how the Government can help people."
And commenting on the plummeting pound, Mr Darling said sterling had been depreciating for some time and that currencies fluctuate continually.
He said his comments on Saturday were a reiteration of previous statements on the challenges facing the global economy.
Mr Darling has also said he is not expecting a Cabinet reshuffle, despite speculation that embattled Prime Minister Gordon Brown will revamp his top team as part of an attempt to win back voters' trust.
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Posted 13 September 2008 - 01:52 PM
