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Sources close to analysts at “Sun Worldwide” say that the recession in the United Kingdom is likely to persist until the end of 2009.
One of the “Sun Worldwide” sources said that the firm believes that recent data confirming that Britain’s economy contracted by -0.4% in the 3rd quarter of 2009 proves that it was right to advise clients against UK investment.
In an unscheduled email to clients, the Asian-based broker apparently told clients that investors needed to accept that the UK was in the direst situation of all its counterparts in the G8 thanks to its heavy reliance on consumerism and its financial services sector.
The pound took a beating on the foreign exchange markets as the shock news was absorbed by traders who had been expecting the country to have emerged from recession with modest growth of at least 0.1-0.2%.
The “Sun Worldwide” email reportedly suggested that the negative outlook may put more pressure on the Bank of England to extend its quantitative easing program in a bid to pump more money into the economy. In all likelihood, the BoE will commit to the purchase of another £50 billion of government gilt-edged securities which may cause sterling to collapse.
“Sun Worldwide” have repeatedly said that there is little chance that Britain can return to growth painlessly and that there is a chance that the country may lose its AAA credit rating.
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