If speculators are on the money, the pound still has a long way to fall

By Richard Fletcher, City Editor


Published: 10:32PM GMT 01 Mar 2010

On the back of the increasing political uncertainty the pound
fell as much as 4 cents against the dollar – the sharpest intra-day
decline for more than a year. If you look at the short positions now being
held by traders, worse could be about to follow.

For markets a hung parliament – whether controlled by a Labour or Conservative
administration – is the nightmare scenario. The fear being that a weak
administration will lack the mandate (and the will) to make the necessary
cuts to get to grips with the public deficit. In the run up to the general
election it’s not just the political classes that will scrutinise every
nuance of every opinion poll.

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Economists warn of budget crisis as Darling only highlights £34bn Tory spending hole - instead of detailing Labour cuts

By
Martina Lees
Last updated at 5:23 PM on 04th January 2010

Britain is at risk of being hit by a budget crisis this year, with the economy likely to slump until the end of 2010, a survey of economists has found.
Almost half of 79 leading economists interviewed by the Financial Times cited a fiscal crisis as the biggest economic risk this year.
The findings come as Alistair Darling claimed there was a £34billion black hole in the Tories’ spending plans
as he stepped up Labour’s election campaign.However, he again refused to detail how Labour planned to cut Britain’s deficit, which is due to hit £1.5trillion.
Alistair Darling accused the Tories of not showing how they would fund £34billion of their spending plegdes
As the election campaigns heated up, economists warned that a lack of faith in public finances could culminate in another run on banks.
‘The nightmare scenario is that faith in the public finances collapses
and that the markets then realise that it is only the
government’s backing that has prevented some very big banks going to
the wall,’ BNP Paribas economist Paul Mortimer-Lee told the Financial Times.However, the economists were divided over how quickly the deficit should be tackled.

Of the 79 surveyed, 33 agreed with Mr Darling that efforts to slash
the deficit should wait until 2011 due to the weak state of the UK
economy.But 31 experts took Shadow Chancellor George Osborne’s view that the
repair job should start sooner to soothe market fears and avert a
potential crisis.Mr Darling has pledged to cut the UK’s ballooning deficit by half
within four years.However, he and Mr Brown have repeatedly refused to be pinned down on where the axe would fall.Both have refused to confirm reports that the Treasury has secretly calculated a need for 17 per cent cuts across most Whitehall departments after 2011.In an interview with the BBC’s Andrew Marr yesterday, the Prime Minister would only say that tax rises - like the 50p top rate
- will plug the deficit. However, the Treasury’s own estimates show that tax will only account for one third of the deficit.Instead of detailing cuts, Mr Brown again promised that public spending would continue to
rise by 0.8 per cent a year.This prompted Mr Osborne to accuse the Prime Minister of ‘repeating his dishonest nonsense that Labour will go on spending’.Today Labour hit back as Mr Darling released a 150-page criticism of Tory pledges made over the last two years. The Chancellor said:’”The Tories have made over £45billion of promises, but can barely
explain how they can pay for a quarter of this. ‘This leaves them with a credibility gap of £34billion.’Mr Darling was repeatedly pressed to spell out Labour’s plans for spending cuts, but he insisted that the economic situation was too uncertain to do so.’I cannot at the moment fix the spending for those other departments,’ the Chancellor said. ‘But… every single department in Whitehall, every single public body,
will have to be more effective and more efficient in what they are
doing.’

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Present worries

By Kevin Peachey
Consumer affairs reporter, BBC News

The shining Gibson guitar was going for a song on the internet, but any expert could hear it did not play like the real thing.

You might not expect musical instruments to be among the haul of counterfeit or dangerous goods seized by trading standards officers. Read more