Economic Apprehension Triggers Plunge in Sterling

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Not since 1985 has the pound plummeted to its lowest level against the dollar, triggering economic woe and ambivalence about the government’s banking support package.

RICHARD BROOKER

Not since 1985 has the pound plummeted to its lowest level against the dollar, triggering economic woe and ambivalence about the government’s banking support package.

Furthermore, the pound sterling fell another 1.6% against Britain’s predominant trading partners, meaning its losses are nearly 6% since Friday. Juxtaposed with the dollar, the pound apprehensively closed at $1.3733, which is a decline of 11 cents. However, this was not the only bad news facing Britain this week, as unemployment escalated to a decade-high of 6.1% according to new official figures. Government borrowing has nearly doubled that of the last financial year to a colossal £71.2 billion, its highest precedent.

It has also been speculated by Robert Stheeman, who is responsible for overseeing national debt, that we should anticipate a government bond auction failing in the near future. Rumours would suggest that the fragility of the sterling is goading people to invest in gilts due to inexpensiveness.

Paul Myners, financial services secretary to the Treasury, is insistent that current government policy does not suggest a slow nationalisation of banks. He stated that banks are "best owned and managed commercially." This statement is made in the midst of British MPs urging for the nationalisation of the Royal Bank of Scotland and the Lloyds Banking Group.