GEORGE OSBORNE was forced to announce two more years of austerity measures yesterday, after official figures showed the national debt spiralling out of control due to rising unemployment and flagging economic growth. Fitch warned that the UK was now the most indebted triple-A country in the world, with the exception of the US. Fitch added that in the event of further financial shocks, such as a meltdown in the Eurozone, Britain would be unable to retain its triple-A rating without more austerity measures. Osbourne admitted as much when he deliverd his autumn statement to the House of Commons yesterday, warning that if the rest of Europe heads into recession, it may prove hard to avoid one in the UK.
Britain’s blue chip index rose yesterday, building ontwo straight sessions of gains as strong consumer confidence data from the US offset renewed concerns about the euro zone debt crisis. European shares are set to snap a three-session winning streak today, with financial stocks seen coming under pressure following Standard & Poor’s move to cut its credit ratings on 15 big banks, mostly in Europe and the United States. U.S. stock futures also fell on the news with S&P 500 futures expiring in December falling 0.5% and Dow Jones Industrial Average futures sliding 48 points or 0.4%.
THE YEN declined against the majority of its 16 main counterparts after euro-area finance ministers agreed to extend the capacity of a rescue fund for indebted countries, curbing demand for haven assets. The yen traded at 103.82 per euro as of 1:40 p.m. Tokyo time from 103.77 in New York yesterday. It was little changed at 77.89 per dollar. The U.S. currency was at $1.3329 against the euro from $1.3317. Europe’s common currency has fallen 3.8% against the dollar and has declined 4.2% versus the yen so far this month.
IRAN faces new hurdles to getting paid for its oil as the U.S. tightens financial sanctions to deter buyers from the world’s third-largest crude exporter. The U.S. approved extra curbs on Iran’s banking system and oil industry on November the 21st, hoping to thwart the country’s nuclear program, and the European Union may follow. Current sanctions have led Indian importers to route payments for Iranian crude through a Turkish bank.
GOLD MINING stocks are trading at their cheapest level in at least nine years even as the industry’s profits are estimated to almost double this year and bullion trades close to its historic high.