Wednesday, 25 November 2009

Financial Times

KING WARNS OF RISK TO CREDIT RATING

The governor of the Bank of England warned on Tuesday that Britain's credit rating could be at risk unless the government comes up with a credible plan to tackle the deficit. Mervyn King called on the next government to adopt a more rapid path to fiscal consolidation than that envisaged by the chancellor, and said there was nothing to stop the Treasury adopting such a plan. Mr King also told the Commons Treasury committee that there needed to be a "significant reduction" in borrowing over the lifetime of the next parliament to eliminate "a large part of the structural deficit". This goes much further than the Treasury's plan to halve the headline deficit over four years.

BUSINESS INVESTMENT HITS 40-YEAR LOW

Figures released by the Office for National Statistics reveal that business investment has fallen during the recession by the most since records began over 40 years ago. Investment also continued to fall rapidly in the third quarter. Spending by companies on goods ranging from IT systems to machinery fell by three percent in the three months to September, compared with a drop of 10.2 percent in the second quarter. Investment has now fallen by 21.4 percent in the six quarters since the recession began. In manufacturing, investment fell by 9.5 percent in the third quarter, and the services sector saw a fall of 2.3 percent. The record weakness in investment across the economy may mean weaker growth in future years.