Will US Recession Hit The UK?
NASDAQ has experienced more than a week long slide. Now companies such as Apple and Google are experiencing losses of several points. This US recession is affecting countries around the world. The Canadian Stock Exchange lost half a trillion in one day, with the Chinese Stock Exchange suffering worse losses the same day.
The Dow and S&P were down more than 2 percent each, while the Nasdaq had fallen more than 3 percent. However, UK stocks rebounded, erasing earlier losses. London Stock Exchange Group Plc and Rio Tinto Group led the advance. The FTSE 100 Index added 17.7, or 0.3 percent, to 5,920.1 as of 9:53 a.m. January 23m, 2008.
This rebound was only shared by Canada where the sub-prime market never got 'out of hand' in 2005. This is good news for mortgage holders. As the markets grow more volatile the banks will lower interest rates to improve borrowing and spending.
George Soros, the fund manager who predicted the sterling's devaluation back in 1992, told the BBC that the negative economic growth is unavoidable in both the US and the UK. Sir Howard Davies, director of the London School of Economics and former Deputy Governor of the Bank of England agreed: "The chances of avoiding recession here are pretty slight."
The question is, 'how bad will the recession be?' The stock markets will answer that question in the next few months. Many analysts believe the banks will lower their base rates, forcing banks to follow by lowering rates on mortgages and personal loans.
Private investors are looking for deals on prime stocks, and many individuals are using the recession to buy premium stocks and build wealth.
A combination of borrowing, better rates, and stock market traffic may prevent the UK from experiencing the same recession that is currently in North America.
Published on January 28, 2008
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