Sterling hits more trouble in the currency markets
The sterling exchange rate fell further today after a report by the Centre for Economics and Business Research suggested that UK interest rates could remain at 0.5% for another two years. There was also a suggestion that the sterling dollar exchange rate could fall to around $1.40 and the UK currency could potentially fall to parity with the euro.
Sentiment has turned sharply against sterling over the last few weeks due to a number of depressing statements from various economic associations and the Bank of England, which has been very negative over the last few weeks. More and more experts are now predicting that the UK economy will struggle in 2010 and indeed unless pre-emptive action is taken, we could see a slide back into recession.
When you consider that the UK economy is way behind many of its European counterparts and other developed countries around the world, there is a real danger that the UK economy could be left behind and remain subdued for some time to come. There is also concern that the run-up to the next general election could see the government taking its "eye off the ball" and spending more time on its election campaign rather than the economy.
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