The United Kingdom ended the week without a peep as the nation lacked major economic data that would give us further insight on what conditions currently exist in the economy yet we know that the scenario is like every other day; a long and painful recession.
Today the National Audit Office said that Prime Minster Gordon Brown has enabled the financial institution Northern Rock to continue the liberalization of high-risk loans, even after the Treasury Department aided the lender with funds, and may show that the Treasury Department has made some mistakes during the examination of the data acquired, before the bank was nationalized, such as the development of a financial plan that suffered losses amounting to 1.4 billion pounds.
The report issued is a great example of Gordon Brown's failure to contain the financial crisis which began in late 2007, and how the Treasury Department failed strongly in the management of Northern Rock and the losses incurred. These events are weakening the popularity of Brown amongst Britons as it threatens him staying in his current position as Prime Minister of the Labour Party in the United Kingdom, especially as unemployment reached 6.5%, the highest pace since 1971, and rising!
On the other hand, wage negotiators are getting the minimum wage based on an annual increase in six years during the three months ending in February, due to continued weakness in economic activity; the deadlock in the financial sector and of course the economic recession experienced by the United Kingdom at the present time. The average annual increase was higher by 2.6%, and this included the first agreement on the reduction of salaries since 1994 in addition to the freezing of many of them.
Away from the events of the day, my dear reader, we come to the most important economic event this week which was the minutes released by the BoE by which they stated why the reduction of interest rates by 50 basis points to reach the lowest level ever at 0.50%, defending their position by stating they are using all measures possible to shore up economic growth in Kingdom.
The unorthodox measures are continuing as the Bank of England in the last few days spent another 3 billion pounds to buy gilts for a total expenditure so far of 5 billion pounds out of the 75 billion pounds, which is the first part of the unorthodox measures used by the central bank that were decided alongside the decision the last rate cut. This plan was developed after giving Chancellor of the Exchequer Alistair Darling gave them green light to buy assets worth up to 150 billion pounds using printed money.
In other news today the central bank bought 345 million pounds of commercial paper under the Asset Purchase Facility that brought the total to 1.89 billion pounds, this should provide the markets with liquidity therefore might increase investments and spending in the UK.
Stocks today declined as anticipations grew that the Feds and the Bank of England buying governmental bonds will not be enough to ease the credit quake and the worst financial crisis since the Great Depression. As of 11:35 GMT the FTSE 100 Index shed 11.83 points or 0.31% to 3,805.10 points.
Another economic chapter is folded in the United Kingdom as we are watching the recession gain strength day by day in the nation as major sectors that fuel economic growth are continuing to tumble downwards; so dear let us hope that next week will contain more upbeat data that help ease the downfall of the nation…