Bank of England Declare UK is Entering Recession

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Bank of England Declare UK is Entering Recession

Wed, 22 Oct 2008

The Bank of England has revealed its belief that the UK economy is now entering a recession, causing the pound to fall to a five year low against the dollar. Bank of England Governor, Mervyn King, declared, ‘The combination of a squeeze on real take-home pay and a decline in the availability of credit poses the risk of a sharp and prolonged slowdown in domestic demand. Indeed, it now seems likely that the UK economy is entering a recession. It is surely probable that the drama of the banking crisis, which is unprecedented in the lifetime of almost all of us, will damage business and consumer confidence more generally’.

Following King’s downbeat announcement, the Sterling fell by more than four per cent against the dollar, dropping by seven cents to $1.6209 – it’s lowest for five years. The Sterling also fell by two per cent against the Euro to a low of $1.2636, despite the Euro falling sharply against other countries. Meanwhile, shares fell significantly in London this morning, as the FTSE lost over 100 points.

It is the second hit in two days for the pound, which suffered from a dismal report from the CBI reporting that confidence among British manufacturers is at its lowest since July 1980.

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