Bank of England also admits Britain is entering recession.
The pound sunk to a five-year low against the dollar as markets responded to the first admissions from Gordon Brown and Bank of England governor Mervyn King that Britain is entering a recession.
London shares plummeted 4.5% on Wednesday and it’s expected that official GDP figures released tomorrow are expected to confirm that the economy shrank in the past quarter, reported The Times. The newspaper also reported that the contraction would be the first since the end of the last recession in the early 1990s.
On Wednesday sterling was down more than six cents, or 3.6% from Tuesday’s close, at $1.6334. Earlier in the day it hit five-year lows under $1.62. Due to the worsening gloom, there are expectations that the Bank of England will slash interest rates by at least half a percentage point before Christmas.
