On what must have been the most difficult week for the UK economy in its long history, every day brought some other record negative statistic with today's expected announcement that the UK economy is now officially in recession, and is expected to remain there for some time.
Data announced today will show the British economy shrank the most since 1990 in the fourth quarter with unemployment soaring and cash-strapped and shell shocked banks curbing the economy through their lack of desire and ability to provide loans to the public and industry, despite government pressure. The pound fell to a twenty-three year low against the dollar this week. Speculation is growing that the financial crisis will mean control of the nation’s financial institutions will be taken up by the Government, due to lack of a better choice.
A monthly index of factory orders between Dec. 11 and Jan. 7 among 527 manufacturers resulted in a score of minus 48, the lowest level since 1992. Gross domestic product is predicted to have fallen by 1.2% in 2008's final quarter, following on from a 0.6% contraction in the previous quarter.
On the FTSE, the staffing group Michael Page, powered by Citigroup's "buy" note rose 4.33 per cent (8.75p to 211p.) A better update than predicted from Enterprise Inns saw them up 18.9 per cent (6p at 37.75p),
On the downside, BT slumped by 9.11 per cent (11.2p to 111.8pafter the company revealed a £340m one-off charge at its troubled global services division.
Also on the downside, property group Great Portland Estates retreated 2.36 per cent to (5.5p to 227.25p), as investors moved to take profits from intra-day gains
The FTSE 100 failed to end its losing streak, losing 7.65 points to 4,052.23, ending in behind for the 11th time out of 12 consecutive sessions.
The FTSE 250 did better edging up by 7.63 points to 6,167.13.
Barclays dropped 10.44 per cent (6.9p to 59.2p) The drop was attributed to fears that if the bank continues to seek government capital, they will pass controlling interest into the hands of investors from the Middle, currently holders of around 32 per cent of the group.
Banking experts played down the fears however, saying out that Barclays could raise a substantial amount of funds at current prices without yielding a controlling stake.
In the wider sector, the picture was mixed, with the Royal Bank of Scotland easing 2.4 per cent (0.3p to 12.2p), while Lloyds Banking Group rose 8.87 per cent (4p to 49.1p).
Sterling continued to falter against all the leading currencies.
- Pound/Japanese Yen 119.29
Elsewhere, firmer crude prices underpinned gains in the oil and gas sector. Cairn Energy was among the strongest, swinging to 1797p, up 3.69 per cent. Tullow Oil, also rose 2.24 per cent (14p at 639.5p) Concerns over financing for the group's Jubilee field development having proved to be unfounded.
The Dow Jones slid 1.3 per cent (105.3 to 8,122.8.) after Microsoft's proposed job cuts and disappointing earnings shook investors, while economic data showed further deterioration in the labour and housing markets. Microsoft fell 11.7 per cent. But Apple rose 6.7 per cent a day after the iPhone maker reported stronger-than-expected earnings.
