Sabtu, 02 Juni 2012

Pound tumbles after British factories post their worst performance in three years

Pound tumbles after British factories post their worst performance in three years

By Hugo Duncan

PUBLISHED: 16:05 EST, 1 June 2012 | UPDATED: 16:05 EST, 1 June 2012

The pound tumbled against the dollar and the euro yesterday after British factories turned in their worst performance for three years.

Sterling dropped nearly two cents to $1.5234 against the greenback â€" a level not seen since January â€" and almost one cent against the battered euro to €1.2378.

It came as investors bet that the Bank of England will be forced to restart its printing presses and flood the economy with cash to kick-start the recovery.

Pounding for UK factories


The Bank has already cut interest rates to 0.5 per cent and created £325billion of new money through quantitative easing to stimulate growth.

But the economy shrank at the end of last year and start of this year as it succumbed to the first double-dip recession since 1975.

A sharp fall in factory output in May raised fears that the economy will not recover in the current second quarter as Britain endures the longest slump for a century.

The manufacturing slump piled pressure on the Bank’s monetary policy committee to act at its monthly meeting next week.

‘We doubt that this on its own will bring about a change of heart from the MPC next week but it is not totally impossible that the committee acts,’ said Philip Shaw, chief UK economist at Investec.

It came on a bleak day for the global economy as a raft of dismal news sent stock markets around the world into reverse.

The FTSE 100 index fell 60.67 points to a new 2012 low of 5260.19 in London, while Frankfurt was down 3.42 per cent and Paris lost 2.21 per cent.

The Dow Jones Industrial Average shed more than 200 points in New York â€" wiping out all its gains this year on a day of carnage on Wall Street.
‘The US economy is not heading for a strong recovery this year,’ said Michiel Van Cranenburgh, a director at Paris-based Neuflize Private Assets, which manages more than £3billion. ‘We try to avoid stocks that are dependent on growth in the US or Europe because we’re clearly not optimistic for the next couple of years.’

In Britain, the closely-watched Markit/CIPS manufacturing purchasing managers’ index â€" where anything below 50 indicates contraction â€" dropped from 50.2 in April to 45.9 in May. The 4.3 point fall was the second steepest in the survey’s 20-year history and took the index down to its lowest level since May 2009 during the depths of the last recession.

‘This is a collapse, this is a huge decline,’ said Ross Walker, UK economist at Royal Bank of Scotland. ‘We’re still a little bit above the lows we hit in the depths of the 2009 recession but we’re heading that way sharply. It certainly suggests the economy is not going to bounce back in the second quarter.’

Markit economist Rob Dobson said: ‘Perhaps of greatest concern is that this month’s drop is not simply linked to the ongoing crisis in the eurozone but to increasing weakness of the UK domestic market.’

Some economists argued that the sharp fall in manufacturing could be partly due to early factory closures ahead of the Diamond Jubilee holiday to celebrate the Queen’s 60 years on the throne.

The extra bank holiday for the Jubilee could cost the UK up to £3.7billion, government figures show, hitting output in the second quarter. Simon Wells, chief UK economist at HSBC, said: ‘Despite the bad news on growth over the past few weeks, we do not expect the MPC to announce more QE in June. But it is likely to be a close call.’

The slump will also put pressure on Chancellor George Osborne to outline new measures to support growth.

‘Politically, it’s going to put more pressure on the government to come up with a Plan B,’ said Tom Vosa, an economist at National Australia Bank.

More at thisismoney.co.uk/economy

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The economy can only be stimulated if people have money to spend, and they DON`T. We are being ripped off right, left and centre by energy, fuel and insurance companies. What is the point of more quantitative easing when the £325billion already printed has made no difference to the country`s recovery. It goes to banks and financial institutions who hold onto it to swell their coffers. Perhaps the real answer is to print more money but distribute it to Joe Public to spend. That could kick-start the economic recovery!

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a drop of 2 cents and 1 cent. that's hardly a catastrophe and would be considered normal fluctuation.

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People don't seem to understand it yet but the west and the UK are finished. There are 2 billion people in the east who are willing to work hard and for 10% of a British wage while many people here only want to claim benefits. The decline will get much much worse over the next few years. There will have to be a very drastic realignment of our living standards and acceptance of the fact we will soon be a second or third class nation.

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Osborne with so many u-turns on his budget and missing so many growth targets must now go. Just call me Dave should have let him go when last November he said he would need to borrow an extra £150B. Now he has got a double dip he will need to borrow much more.

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Speaking as one of the thrity million people with savings I can confirm that I won't be back in the shops until the pound is stable and the income stream through 'interest' returns.This will change when we see the BoE rate tweaked upwards, indicating that the period of robbing the thrifty in a vain hope to produce recovery through profligacy is coming to an end. At the moment the policy at the BoE is as bankrupt as the country.

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So far there has been no real cuts or any obvious sign that government has the will or knowledge to get the country going. QA is not the answer, but a realistic approach to the employment/green/health safety/planning/rates/etc/etc laws and policies would most certainly change things. Put a stop to local governments wild spending, lottery money to pay off national debt- so much can be done. of course Cameroon and Co think they can bamboozle us out of recession!!!

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The last thing we need is more QE as we have to remove our eggs from the EU Basket case and look for markets eksewhere in the world. Over the years governments have allowed the unions to get us into a position where we are no longer competitive and this has to be reversed it is going to be painful but if living standards have to fall as part of the deal then so be it.

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HEADLINES.14:31 GMT, 1 June 2012 Manufacturing suffers from domestic squeeze as well as eurozone export frailty. Barring a sharp turnaround this month, output could fall by as much as 1 per cent in the second quarter, dashing hopes that the UK will make a quick exit from recession, The truth!.There was NO turnaround,the fall will be more than 1% and there'll be no quick exit or fixes!. Henry, Reality, 01/6/2012 16:06 NOW THIS HEADLINE 21:05 GMT, 1 June 2012 THE BIG LIE HAS BEEN REVEALED.SHARP TURNAROUND?????

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