Fears grow after industrial investment slumps and leading investor warns that pound could become a ‘basket case’
Larry Elliott, Jill Treanor and Luke Moore
Guardian [UK]
26 February 2010
Fears of a double-dip recession and a sterling crisis in the run-up to the election were raised last night amid news of collapsing investment in British industry and a warning from one of the world’s leading financiers that the pound could plummet within weeks.
The pound fell sharply on the foreign exchange markets after a day of grim economic news which saw an admission from RBS that it had missed government targets for business lending, a downgrading of the UK growth prospects by the European commission and a warning from the CBI that consumer spending was likely to remain weak ahead of polling day.
Sterling, already down by a cent against the dollar following the release of official figures showing capital expenditure plunging by almost a quarter between late 2008 and late 2009, saw its losses doubled after Jim Rogers, the former business partner of speculator George Soros, said sterling was a potential “basket case”.
“Other currencies aren’t strong and the euro has real problems, with cracks much wider than Greece beginning to show,” Rogers said, “but it’s the pound that’s most vulnerable. In real terms, it’s already devalued against virtually every currency barring the Zimbabwean dollar and it’s especially exposed over the weeks running up to the UK election. In a basket of currencies, the pound is potentially a basket case. That will put Britain in an extremely bad position.”
The article continues at the Guardian.
