Sterling plunged seven cents against the dollar and the FTSE tumbled more than 7pc after official figures confirmed that Britain is on its way to its first recession since the early 1990s.
THE TELEGRAPH: UK gross domestic product fell by 0.5pc, the first contraction since the second quarter of 1992, and the biggest drop since the fourth quarter of 1990. Economists had expected a drop of 0.2pc.
"Not only do Q3's GDP figures confirm that the UK has entered a recession, but the 0.5pc drop is truly shocking," said Vicky Redwood, UK economist at Capital Economics.
The cocktail of bad news coming from the economy has hammered sterling and the FTSE 100 this week. The pound was down seven cents at $1.55 in mid-morning trading and the FTSE tumbled more than 6pc. London Stock Exchange, HBOS and Barclays lead the fallers after dramatic declines in Asia.
The grim data suggest that the UK will be in technical recession - two consecutive quarters of negative growth - by the end of the year and follows declarations this week from the Prime Minister and the Bank of England's Governor Mervyn King that the country is in recession.
Many of the symptoms of a deep slowdown are already present, including a sharp rise in unemployment, falling house prices, low wage growth and faltering business confidence. >>> By Angela Monaghan | October 24, 2008
THE TELEGRAPH: FTSE 100: Oh Dear, Oh Dear, Oh Dear
Traders looking for some kind of support have seen their hopes wiped away as the pound and euro plummet to depths not seen for many, many years.
The pound has fallen almost 40pc in the last 4 months, and the euro 30 pc. Given that an enormous proportion of our consumer goods come from the Far East, the fear is that margins for commodities, manufacturers and retailers will have to be squeezed and still inflation pressures in the western economies may build.
And then there's the GDP data. The problem is this data is already from a different world. Since the end of September the banks have been emasculated and the pound has gone into hibernation.
The independent Bank of England master economists seem to have clean missed the fact that the UK economy was careering into the buffers and have persisted with the anti-inflation fight well past the point of good sense. >>> By Simon Denham | October 24, 2008
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