We are not alone!
15 / Feb / 2009
Last months ILO Unemployment Data, Claimant Count and Average Earnings recorded figures slightly more positive than expected. The unemployment rate came in at 6.3% and average earnings was recorded at 3%. Claimant Count figures rose by 73,000, below the expected rise of 90,000. However, although the figures were not as devastating as originally expected the total number unemployed pushed to 1,971,000 but is widely expected to be over 2,000,000 in the very near future. Given the current situation it now seems pretty obvious to us that further reductions in Bank Rate is going to make very little difference. In the Bank of England Inflation report it was noted that further easing may be required but the chance of zero interest rates was unlikely. Mervyn King stated that he felt “we were now in the range where it doesn’t make a great deal of difference where the rate is so we are at the point where we need to think about a wider set of actions”. It was also mentioned that the central bank would like to create central bank money to finance the purchase of assets. So what the next move will be, well who Knows, but lets hope they don’t resort to printing cash!
The German, French and Italian economies all shrank by more than expected in the last quarter of 2008, setting a dismal tone for a weekend G7 finance leaders' meeting on the global crisis. Australia's parliament pushed through a stimulus plan and the U.S. Congress were voting last Friday on President Barack Obama's rescue package to lift the economy out of recession. German GDP shrank 2.1 percent quarter-on-quarter at the end of 2008, the worst contraction since the country's unification in 1990. A French prediction of a more than one percent contraction in 2009 added to the gloom before the meeting of G7 financial leaders in Rome this weekend. Italy's economy shrank by a quarterly 1.8 percent in the last three months of 2008, the steepest drop since 1980. This week sees the release of some key data with CPI being released tomorrow, the MPC minutes on Wednesday, Public Sector Net Borrowing on Thursday and Retail Sales on Friday.