Sterling continues to slide
UK unemployment
UK unemployment rose by 131,000 to 1.92 million between September and November, the highest total since September 1997. That does not include the tens of thousands of jobs cut since November. The number of people claiming jobseeker’s allowance increased by 77,900 to 1.16 million, according to the Office for National Statistics.
Employment minister Tony McNulty said the figures were “very disappointing” and predicted things would “get worse before they get better”. The unemployment rate was 6.1% for the three months to the end of November, compared with 5.2% in the same period of 2007.
It is the highest jobless rate since the three months to the end of April 1999. There were 225,000 redundancies in the three month period, which is the highest level since the figure began being compiled in 1995. “This is a very rapid pace of job shedding,” said Alan Clarke at BNP Paribas. “It is still very early days in this recession and there is plenty of bad news in the pipeline.”
Already Sterling has weakened by about 1% across the board.
Dollar Rate 7 year Low
Sterling’s slide has continued, with the pound falling close to $1.37, as concerns about the UK economy and the banking sector intensified. Sterling fell as low as $1.3715, its weakest level against the dollar since mid-2001.
The pound also weakened against the euro, with the single currency now worth 94 pence.
Banking shares took a further hit on Wednesday, with Barclays sliding more than 20% to a 24-year low. Shares in Lloyds Banking Group, which now includes HBOS, were 17% lower at 37p.
The declines followed sharp falls in finance-related stocks in the US, amid renewed concern about the health of the global banking system. Royal Bank of Scotland, however, was up 5% at 10.8 pence.
Also, Brittania are to merge with the Co-Op, creating the UK’s biggest customer owned bank. They hope their ethical approach will stand them in good stead through the banking crisis. I hope so as I bank with both of them!
More bad news tomorrow, probably! If you have a currency requirement, sitting on the fence is risly in the current climate. Nobody knows which way rates may go, but certainly the UK economic position is extremely weak at the moment. More bad news is likely to hit the pound further.
“I would urge you to sell any sterling you might have. The UK is finished” said Jim Rodgers, chairman of Singapore-based Rogers Holdings, in an interview with Bloomberg Television. Evfen the deputy director of the Bank of Engalnd said ion the last few days what the next step is in fighting the economic slowdown. His reply? We cross our fingers.
Crossing fingers does not sound like a sound economic tool to me. Worrying times.
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