Haha. Lucky we tied ours to the German's.
http://www.iht.com/articles/2008/07/03/business/ukecon.php
PARIS: A housing market in shambles, inflation at the highest level in years and signs that the economy is headed for, or already in, recession. Sound familiar?
The British economy, like its counterpart across the Atlantic, has fallen on hard times, and in many ways the experience appears to be mirroring that in the United States. Indeed, the run last September on a British mortgage lender, Northern Rock, was one of the events that helped to embed the terms "credit crisis" firmly into the global consciousness.
"A recession is more likely than not by the end of the year," Peter Newland, who covers the British economy for Lehman Brothers in London, said Thursday, summarizing a recent string of dismal economic data that have led economists to revise their growth forecasts downward. "Activity seems to be declining across the economy," he said.
The FTSE 100, the benchmark London stock index, has fallen about 19 percent from the high of 6,732.4 that it hit in June 2007 - just short of the 20 percent decline that is commonly said to define a bear market. It gained 50.3 points, or 0.93 percent, to close at 5,476.9 on Thursday.
Consumer confidence is the lowest since 1990, as oil prices drive toward $150 a barrel and unemployment has risen for the past four months.
Multimedia
Managing Globalization: If China's growth dips, will the world suffer?
» View
Related Articles
Europeans concerned that U.S. banking problems may spread
Today in Business with Reuters
Abu Dhabi puts more cash on the line in Hollywood
Once in crisis, Sony is back in the game
Coca-Cola makes $2.5 billion bid for Chinese juice maker
In a written statement to a parliamentary committee Wednesday, Charlie Bean, deputy governor of the central bank, called the current situation "the most challenging set of circumstances since at least the early 1990s and possibly earlier."
The main force dragging down the British economy is the collapse of the once red-hot housing market, which enriched many Britons as long as credit flowed nearly as cheaply as in the United States.
According to Nationwide Building Society, a leading British mortgage lender, housing prices have fallen for eight straight months. In June, they fell 6.3 percent from a year earlier, the biggest drop since 1992, taking the price of a "typical" British home down to £172,415, or about $343,000 - a decline of more than £13,500 from the top of the market.
The British central bank said Monday that mortgage approvals in May were at the weakest level on record - only 42,000 for all of Britain, down from 58,000 in April.
As the housing market sputters, consumers have retrenched. Shares in Marks & Spencer, the iconic British retailer regarded as a bellwether of the domestic economy, plunged more than 25 percent in two days after it reported a sharp decline in sales.
Gordon Brown, the beleaguered prime minister, sought to look on the bright side, while acknowledging that the remarkable run of prosperity over the previous decade or so has hit a wall.
"The task at the moment is to keep the economy moving forward," he said Thursday, speaking to a parliamentary committee in London. He expressed confidence that the British economy was "far more resilient than it was facing the last two oil shocks and facing some of the problems we had when there was a world downturn in the early 90s."
But that seems little consolation to the British today. Unions are agitating for higher wages, even as inflation rose at a 3.3 percent annual rate in May, above the 3 percent upper limit of the Bank of England's comfort zone.
And despite the growing distress of British workers and businesses, economists hold out little hope of monetary policy relief. Economists surveyed this week by Reuters were unanimous in predicting that Mervyn King, the Bank of England governor, and his colleagues on the Monetary Policy Committee would hold rates unchanged at their meeting next Thursday. Only 23 of the poll of 72 economists surveyed this week forecast lower rates by year-end, down from 41 of 62 a few weeks ago.
"Wherever you look at the moment, the data are pretty worrying," Howard Archer, an economist at Global Insight in London, said. "It's a terribly difficult position for the Bank of England." The central bank's main interest rate target, at 5 percent, is already the highest among G-7 countries.
Economists said the economy was lagging slightly behind the U.S. business cycle. The Federal Reserve has moved aggressively, cutting its main rate target to 2 percent currently from 5.25 percent last summer, and Congress moved quickly to enable 130 million households to receive tax rebate checks as part of a $168 billion stimulus program.
In contrast, the British government has little leeway to spend its way out of any slump. The public purse is constrained by two rules - the so-called "golden rule," in which the government borrows only to invest and not to fund current spending, and the sustainable investment rule, in which public sector debt is to be held stable at "a stable and prudent level."
---------------------------
De Gaulle to the General Koenig, Norman hero of Bir Hakeim: "Hear and tell your troops: the whole of France is watching you, you are our pride."[
