I the £ on an up againt the euro???

[Boscoe]

Good post AnOther, I think you summed the situation up very well and wholeheartedly agree with your point about the party politics and voluntarily forming a crisis coalition. I posted before of the nightmare situation of a hung parliament for the pound, with Labour gaining ground, the reality becomes closer.

With the terrible January retail figures coming out today, there is little doubt in my mind that the UK will return to negative growth in the Q1, that certainlywon't help the pound! It says a great deal about the UK economy that even with the Euro in so much trouble the pound is still falling against it

Here's a real worry for all, if the ECB decide to burn the speculators currently shorting the Euro to the tune of €5.9bn by raising the interest rate to say 1.5 or 2% then the pound will crash like a stone against it! Although I think I am still safe with my long on Euro against sterling.

[Quillan]

I don't think the UK is 'out of the woods' and it will probably get worse as confidence is Sterling diminishes as it is that alone thats keeping it afloat. I base this on the fact that everyone is blaming Greece and its economic problems at the moment. They have a fiscal deficit of around 12% (thats the difference between what the government spends against what its income is), quess who's got the same deficit, the UK of course. The only difference is that the world markets have more confidence in the UK than they have in Greece but its gradually waining.

[Benjamin]

Is the £ in for another kicking tomorrow or is the following already built in?

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=381354&re=8392&ea=161021&Page=1

If the three month forecst for inflation rises above the State Pension increase how are a lot of pensioners going to vote. Do you recall Teflon Tony giving all pensioners a rise of £5 when it happened before?

Trying times ahead.

[velcorin]

Some points.

1 Axel Weber (ECB de facto Vice) stated categorically last week that there would be no change to EUR rates until the end of Q2, and neither was their version of QE under consideration for removal until the same time.

2 At the annual LSE Economic Forum yesterday Stiglitz and Nourani both stated emphatically that neither the US or GB would lose their AAA rating. Both won their Nobel prizes for predicting the Credit Crunch.

3 S&P and Moodys have stated frequently that there are currently no plans to change the GB/US ratings.

4 GB Q4 2009 growth was an estimate. The initial figures always are. Expectations are that the 0.1% figure will be revised upwards to 0.4%. The DE/FR figures (as always) will be downwards to 0.15%. Won’t make much difference to the GBP/EUR Forex rates as the figures have already been factored in.

NB 1. GB personal debt numbers include month end credit card debt. So, unless everyone pays off their CCs in full 2 weeks early, you are included in the figure. A bit false that figure.

NB 2. DE/FR do not have ANY record of personal debt. So comparison is absolutely impossible and is simply a lazy journo trick over egg a story.

[AnOther]

In normal times inflation = higher interest rates = strength for the £

However, in these 'interesting' times, nothing is a given any more [8-)]

[Boscoe]

If there is any indication from the BOE that interest rates may be raised to ward off inflationary pressure, it could help Sterling, although I think this is unlikely.

[Boscoe]

velcori,

Some points

1 The ECB also say they won't 'save' Greece but I don't think anyone believes that if push comes to shove they will.

2 "both stated emphatically that neither the US or GB would lose their AAA

rating" should read "both stated emphatically that neither the US or GB should lose their AAA

rating" and important difference

3 The agencies may have indicated they'll wait until the election result, but only last week S&P downgraded British banks and said the following in a statement - “We no longer

classify the United Kingdom among the most stable and low-risk banking

systems globally. “This is due to our view of the country’s weak economic environment, the

reputational damage we believe has been experienced by the banking industry,

and what we see as the high dependence on state-support programs of a

significant proportion of the industry.

"We view UK economic risk to be high relative to other major, mature

banking systems. This reflects the sharp decline in economic output and

our expectation that the unwinding of the high level of debt (of the

government, households, and certain industrial segments) will weigh

heavily on relative economic growth prospects and banks' financial

performance.” Hardly a note of support!

In May last year S&P said there was a "one in three" chance that Britain's rating on its sovereign debt might be cut. Is the UK economy in a much better position nine months on, or has it's debt increased?

Moody's said the UK would 'bend but probably won't brake' the AAA rating (early December). Fitch gave a very blunt warning to the UK that they risk losing their AAA status unless they map out a clear path to budget discipline (late December) and as far as I know no further indication has come from S&P, so I'd be interested if you could post some links regarding your claim that the agencies have 'frequently' stated that they have no intention of changing the UK's credit rating.

4 "GB Q4 2009 growth was an estimate. The initial figures always are.

Expectations are that the 0.1% figure will be revised upwards to 0.4%"

Expectations by whom? With the latest retail figures and then the

figures today for the non EU trade deficit being much lower than

expected in Q4, who is expecting the figure to be revised upwards?

(edited to address each point)

[Quillan]

I remember some months back that people were making comments and predictions on whats happening with the pound and the Euro. Some said that it will be at around 1.25 by Christmas or higher, somebody reckoned 1.45 by July. There were loads of data and reasons mentioned etc, etc. At the time it was about 1.15. I'm sorry but it seems they were all wrong in their predictions. So if the 'professionals' can't get it right what hope is there? [:P]

[Chancer]

Well I, and I am sure most rational minded people, could see the credit crunch coming for years, pity I kept schtuum as I could have won a Nobel prize by all accounts!

[baypond]

[quote user="Quillan"] The only difference is that the world markets have more confidence in the UK than they have in Greece but its gradually waining.[/quote]

I agree with you about the UK, but I think one major difference is that the UK has a flexible exchange rate which takes some of the strain, whereas Greece is locked in.

By the way, it seems there is progress afoot for EU to bail out Greece in some form or another - it hit the tapes a couple of hours ago.

[baypond]

[quote user="Quillan"] The only difference is that the world markets have more confidence in the UK than they have in Greece but its gradually waining.[/quote]

I agree with you about the UK, but I think one major difference is that the UK has a flexible exchange rate which takes some of the strain, whereas Greece is locked in.

By the way, it seems there is progress afoot for EU to bail out Greece in some form or another - it hit the tapes a couple of hours ago.

[Quillan]

[quote user="baypond"][quote user="Quillan"] The only difference is that the world markets have more confidence in the UK than they have in Greece but its gradually waining.[/quote]

I agree with you about the UK, but I think one major difference is that the UK has a flexible exchange rate which takes some of the strain, whereas Greece is locked in.

By the way, it seems there is progress afoot for EU to bail out Greece in some form or another - it hit the tapes a couple of hours ago.
[/quote]

Funny enough there was something about that on MSN this morning but I don't normally take MSN that seriously, perhaps I should.

[Bugsy]

Crikey

I'll take the benefits of that, of course, but it really is a sad statement of what the western-world has become. Big winners and Massive losers. Hedge-fund managers really are true parasites.

.

[nounours]

[quote user="Chancer"]Well I, and I am sure most rational minded people, could see the credit crunch coming for years, pity I kept schtuum as I could have won a Nobel prize by all accounts![/quote] 

 Errrr if you could see it coming how come your alter ego put all your money in an Icelandic bank?

[Chancer]

[quote user="nounours"]

[quote user="Chancer"]Well I, and I am sure most rational minded people, could see the credit crunch coming for years, pity I kept schtuum as I could have won a Nobel prize by all accounts![/quote] 

 Errrr if you could see it coming how come your alter ego put all your money in an Icelandic bank?

[/quote]

That made me smile [:D]

The answer is that he was, and always will be a Chancer!

[Benjamin]

Is it because the UK Government doesn't know these things are going to come out or do they allow it to happen like this so as to keep the strength of the £ down?

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=383130&re=8491&ea=161021

[mint]

It's just so predictable, isn't it?

Pound rises a bit: those of us on sterling incomes feel a little lift of the spirits, spring appears imminent, hopes rise a mite, worries recede a touch, uncertainty eases...........then, wham, the Governor of the Bank of England writes a letter, the Chancellor opens his mouth, the government department publishes its figures and ................wait a minute; haven't we been here before?[:@]

[Bugsy]

This is from the mouth of experts

"Public sector net borrowing was 4.3 billion in January, £9.6 billion higher than in January 2009."

What !!

.

[Jay]

[quote user="Bugsy"]This is from the mouth of experts

"Public sector net borrowing was 4.3 billion in January, £9.6 billion higher than in January 2009."

What !!

[/quote]

What expert would that be then?

[Bugsy]

[quote user="Jay"][quote user="Bugsy"]This is from the mouth of experts

"Public sector net borrowing was 4.3 billion in January, £9.6 billion higher than in January 2009."

What !!

[/quote]

What expert would that be then?

[/quote]

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=383130&re=8491&ea=161021

.

[Jay]

Sounds like the sort of thing Darling would come out with! perhaps she was quoting him!

[velcorin]

Can't say I'm a big fan of Citywire, they seem to simply rehash stories from other news sources, often with lurid headlines. You'll get a more sanguine version here http://www.bloomberg.com/apps/news?pid=20601102&sid=a76J3178ihW8

A pity the ONS is so damn honest. However the data had already been factored into the bond and EUR Forex markets, they hardly moved, and are back where they started this morning. GBP is down against USD, so's EUR, which is no bad thing. Corporate Germany isn't having a happy time with the high EUR, 40% of French trade is with Germany, so Corporate France squeals too!!

[Jay]

 Perhaps this is what she meant: Net borrowing was more than £9bn higher in January than a year earlier, as the

government faced a deficit of £4.3bn compared with a £5.3bn surplus in

January 2009.

[Quillan]

From the report on the totally unbiased BBC website.

"The Office for National Statistics said the government had borrowed a further £4.3bn last month. It is first time the government has borrowed money in January since records began in 1993. "

For the whole BBC report http://news.bbc.co.uk/2/hi/business/8521587.stm

[velcorin]

BBC unbiased? They're in the entertainment business! Pure and simple. I gave up with them after apparently there was a riot, and pitch invasion, by massed gangs of alcohol fuelled, violent, football hooligans at a football match I was at.........................ermmmm, no there wasn't..................zilch, nothing, nada, rien, but, that's the story they wanted, and presumably the whole of middle England(/France!) tutted into their cornflakes. My mother rang to check I was OK!

Reading the comments from the shadow chancellor, reminded me of a question I was discussing with a colleague..........Why are politicians all talking "Cut, cut, cut"? Where's the other side of the equation "Tax, tax, tax"? Sarko, Merkel, Brown, all have elections coming up. Sarko and Merkel haven't got any room to manoevre with raising taxes[:D]. But, my guess is that my generation is going to have to pay for my generation of my parent who've had a low tax party, and for the countercyclical spending by governments who've had to pick up the tab, for the rest of our lives with with more realistic taxes. Hopefully, the UK will not get as bad as France[:D]