Friday, October 26, 2007

UK Economy Vulnerable

The Bank of England has warned that the UK economy remains vulnerable to the reverberations from the global credit squeeze. The BoE makes special mention of the fact that the commercial property sector is particularly "prone to further shocks and to rises in the cost of finance".

In its financial stability review the BoE also warns that equities are vulnerable, and that the US dollar might fall sharply "if the change in investor sentiment towards US securities experienced recently were to persist".

Given this warning, it will be interesting to see if the BoE translates its words into actions such as reducing interest rates.

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