THE TELEGRAPH: The pound is suffering its worst slide since Britain was forced off the gold standard in 1931.
Sterling dipped closer to parity against the euro, with the single currency now worth more than 95p for the first time ever. The pound's fall came amid fast-growing disquiet about the fate of the UK economy and consumer sentiment next year.
The pound has now fallen by 23pc against a basket of other currencies, according to figures from the Bank of England. The fall is sharper than the devaluations in 1992, after leaving the Exchange Rate Mechanism, 1976, when the International Monetary Fund was forced to intervene, and 1949, when a host of countries slumped against the dollar.
The devaluation is only matched by the moment in 1931 when, under Ramsay MacDonald, the UK was forced to abandon the gold standard, plunging by more than 24pc against the dollar. The parallel is significant, since many economists have attributed the gold standard exit as one of the main reasons the UK enjoyed a relatively mild depression in the 1930s, while the US suffered mass unemployment and saw its economy shrink by a third.
The pound had fallen more than 1½ pence against the euro yesterday and was trading at 94.15 early on Friday. Late last night it fell as low as 95p, with the pound buying €1.047.
Traders are increasingly convinced that the Bank of England will follow in the Federal Reserve's footsteps and cut interest rates all the way to zero by early next year. >>> By Edmund Conway and Angela Monaghan | December 19, 2008
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