UK Prime Minister Announces Revised Bailout Strategy, Will This Save Britains Recession
The British government has unveiled a new recovery plan to support the financial system, to re-launch the economy. The bailout includes a cover to protect the financial system from another a new collapse of the banking system. The banks covered will have to pay for the cover, with money, no shares allowed. However this presages the price of life will go down, deflation will push saving although this could further slow down the British economic crisis.
Property market continued to plunge drastically in the last months, and the country’s greatest mortgage lender, Halifax, forecasting, more than 16 percent year per year decline in the 3 months to December 2008. Market prices have fallen twenty per cent from their peak in 2007 and more declines are possible as approvals for new home loans have hit a record low, according to figures.
The number of unemployed people surged up to one million in last year, climbing super fast since the last recession in the nineties. The crisis has pushed thousands of job losses in lot of different market areas, with some forecasts of 3m+ unemployed by the end of 2010. Some retails have gone out of business recently. Shops have also been slashing retail prices to be able to pay the full amount of loans.
The financial policy solutions of Great Britain are mainly focused on pushing the financial recession and do nothing for the currency. Which means the pound will likely keep to go down. We will witness the pound being stable around one euro however short term forecasts for pound is still negative. You too can make money exchanging currency – give Foreign Currency Direct a call.
Recent stats amongst analysts confirmed that most probably the Monetary Policy Committee will slice interest rates to 1.25 points from two points, putting the interest rate to the lowest since it was founded in 1694.
This means a lower return for the city investors who then invest in other currencies, because of the decline of the pound.
Policymakers have announced the bank may eventually have to cut bank interest rates to 0 and opt to quantitative easing, essentially printing more sterling to encourage the financial situation. This would seem to go well with the government plan of attempting to spend their way out of the bank problem, the exact opposite of majority of European governments decisions, which is a possible reason for the massive drop in Pound against to the Euro and US Dollar.
