Banking and housing fuel gloom
The shockwaves from the collapse of the US investment bank Bear Stearns rumbled through financial markets in London yesterday as the old adage that if the US economy sneezes Britain catches a cold resurfaced anew.
With the UK housing market looking shakier by the week and Britons as indebted as their US counterparts, the pound fell sharply and analysts said the Bank of England would have to cut interest rates more aggressively than it has done to date to ward off a possible recession here.
An offer by the Bank to add £5bn of fresh funding to the overnight interbank markets was nearly five times oversubscribed by panicking British banks as they scrambled for cash from Threadneedle Street because of their fear of lending to each other.
The Bank, which made a similar move last September after Northern Rock fell apart, stressed that it and other central banks around the world were monitoring the situation carefully.
Gordon Brown assured parliament that the fundamentals of the British economy remain sound while the chancellor, Alistair Darling, wrote to his counterparts in the Group of Seven leading economies urging them to redouble their efforts to introduce a new system of financial stability.
More Recent News
- New Year same trouble Alex Coxall 6 Jan. 2009 The 2009 RICS forecast predicts a further fall this year of 10% in average property price, which would mean a peak to trough drop of 25%. The predictions are based on the continued reluctance of lenders to lend and the increasingly glum economic climate we are facing. Read more
- Darling considers credit guarantees Bloomberg.com 11 Dec. 2008 Dec. 10 (Bloomberg) -- U.K. Chancellor of the Exchequer Alistair Darling is considering credit guarantees for households and companies to spur bank lending, a person familiar with the plan said. Read more
- Rics figures show November fall Alex Coxall 11 Dec. 2008 Figures released by the Royal Institution of Chartered Surveyors (Rics) show that property prices have continued to decline during November. Read more
- Price drop slows slightly Alex Coxall 27 Nov. 2008 The rate of house price drop fell in November according to figures released by Nationwide today. The market however remains nearly 14 % lower than it was a year ago, as buyers remain worried and lending remains curbed. Read more
- Housing market Downfall 27 Nov. 2008 Famous scene from an award winning film reworked. Read more
Be the first to comment
Nobody has made any comments on this entry - be the first to have your say below.