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FTSE 100 closes under 4000 level as concerns mount

The FTSE 100 index today closed down just over 100 points at 3990.86 amid concerns of a possible stalling of the UK recovery and depressing news from America. As we touched on in one of our earlier post, the Bank of America released figures which on the surface seemed fairly upbeat only for one-off gains and a substantial increase in debt provisions to take the gloss off the announcement. The rather downbeat statement from the chief executive of the company also gave many investors a short sharp shock amid a growing realisation that recovery in the US and the UK economy is still very fragile.

There are also significant concerns about potential tax hikes in the UK budget and any knock-on effect this could have on the business sector, consumers and the rate of recovery which many are expecting. As we have suggested on many occasions, the situation we are currently in is like nothing ever seen before and while there are signs that economies may well be turning we are still very much in "no man's land". There are also concerns that the UK government will try to exaggerate the potential recovery later this year and early next year, something which would further reduce the government's credibility in the eyes of investment and financial markets.

Many observers believe this week is D-Day for the UK government and could see a "kitchen sink" approach where all bad news will be sunk and the emphasis moved on to the future. It could well be an interesting week for the UK economy!

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