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Shares slump amid job cuts and soaring home repossessions
Hugo Duncan20.02.09
Shares in London slumped today on fresh fears over the state of the economy and a heavy sell-off in New York.
The FTSE 100 index crashed below the 4000 level - down 91.7 to 3926.67 - as City trading screens flashed red. It saw £21 billion wiped off the value of Britain's blue-chip companies.
The slump followed a dismal night on Wall Street where the Dow Jones Industrial Average fell 89.68 points to a six-year low of 7465.95. It came amid a fresh wave of gloomy economic news on both sides of the Atlantic including more British job cuts and soaring home repossessions.
The Council of Mortgage Lenders was expected to show that more than 40,000 people lost their homes last year while government figures showed repossession orders made by courts increased in the final three months.
Anglo American announced 19,000 job cuts around the world with hundreds of British jobs under threat at its Tarmac business.
Bank of England deputy governor Sir John Gieve warned that Britain could slide into a decade-long depression similar to that suffered by Japan in the Nineties.
City commentator David Buik, of BGC Partners, said: "The slew of dispiriting international economic data is now starting to resemble a tsunami. It just gets worse and worse."
Only one FTSE 100 stock was in positive territory in early trading - insurer Prudential. Banking stocks were once again under pressure as speculation that they will need to turn to the Government for more emergency funding refused to die down.
Royal Bank of Scotland was down 4.6 per cent, Lloyds Banking Group one per cent, and Barclays three per cent. Mining firms were also on the slide as the global economic downturn hit demand for metals.
Matt Buckland, a dealer at City trading firm CMC Markets, said: "This could be a rather damaging end to the week after the Dow closed last night below the key 7,500 level - its lowest in around six years. Investors are quite simply running out of short-term confidence with equities - especially among the banks."
The Bank of England has cut interest rates to a 315-year low of one per cent as is now preparing to print money to flood the economy with cash.
Reader views (4)
Cut taxes to help people pay bills, companies to keep employees on and those in debt to pay down some of that debt so that they will once again become confident about spending. Pouring money into the banks is just a bottomless pit.
- Dan, Manchester
Eventually people will realise that with house, car & shares falling in value they are not really falling in value, Its CASH which has gone up in value. People wont pay inflated prices for houses, there is an over supply of new cars, our old ones are worth peanuts in PX Just because the BOE has reduced interest rates to a pittance dosent imply that there is too much money floating around, quite the opposite, wait a few weeks and watch how Banks will have to increase savers rates just to get the money in to lend out. Of course the real reason that the government has poured money into Banks is that they need it to pay wages, never mind bonuses.Money will become harder to get hold of as the people who have it wont spend it. "Ther's No Interest Like No Interest"
- Jim Alan, Lake District
The reckless monetary policy of the Bank of England, encouraged by the reckless management of the economy by Gordon Brown and nuLabour means Britain is going to see some very dark years.
nuLabour raided the piggy bank while the times were good because Gordon Brown truly believed his own nonsense about putting an end to 'boom and bust' and now we have no money left when it is needed most.
To put it suscinctly, "In the UK we are up the creek without a paddle."
- Ian G-B, London, UK
The UK needn't go into a ten year recession! The Government continues to feed the nation to the beast. They are handing money to the banks when they should be studying the ecology of generating wealth. Pay in Paypackets, puts money in the till and investments in Banks and Building Societies.
To date the results are clear. Give money to the Bank and the FTSE hits the deck. Employ money in projects to kick start the economy.
- Maria, London
