The media in general can't get away from the psychobabble over Brown
and his future, to the exclusion of everything else even failing to
give the full detailed analysed results of the election itself.
[EG What was the turnout? (Regionally if possible)
What were the total votes for each party?
Were the total votes for each party more or less than last time?
Allowing for the decrease in the total number of MEPs, who were the
gainers and losers and by how much?
Without those basic figures all comment is pure waffle. But that's
all the meejah do these days - waffle from the gutter.]
There is a small point I suppose. Although Britain was the first
country to vote we were the last to get our results out!
Meanwhile in the real world the recession gets worse and all the
Labour party's very public nervous breakdown is making matters
worse. Today we learn that LDV, the van and truck maker which has
been on a knife edge for a long time has finally fallen into
administration, threatening up to 850 jobs and thousands more in the
supply chain. . We also learn that the recerssion has caused
electricity usage to drop 4 per cent while the reckless government
borrowing goes up, with the promise that the £150 bn which we must
pay back somehow , is not the end and that that figure was "just a
notional starting figure". [Danny Blanchflower, who retired from the
Monetary Policy Committee last month!]
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The pressure on Mr Brown's leadership, given what is expected to be a
dismal showing in the European elections, could fuel a damaging
cocktail of political and fiscal worry.
Investors have so far assumed that the Conservative Party will win
the next general election with a large enough parliamentary majority
to drive through cuts in public spending. The possibility of Mr Brown
being ousted before a general election jeopardises that, according to
Michael Saunders of Citigroup. A new leader, he argued, may reduce
the scale of a likely Conservative victory at the next general
election or even leave a hung parliament.
"If so, this could markedly raise risks of a fiscal crisis as
investors and ratings agencies lose patience, posing clear adverse
risks to both sterling and gilts," said Mr Saunders.
Sterling bore the brunt of investors' fears last week, losing more
than two cents against the dollar. Experts are forecasting more
volatility for the pound this week as the results of the European
elections are digested.
"Markets are getting very, very nervous about the UK political
scene," said Howard Wheeldon, a strategist at BGC Partners.
Britain's public finances have been in sharp focus as the recession
savages tax receipts. Alistair Darling, the Chancellor of the
Exchequer, admitted in April's Budget that the Government needs to
sell a record £220bn in gilts to plug the gap in the public finances.
Their deteriorating position has already prompted rating agency
Standard & Poor's to threaten Britain with eviction from the club of
most creditworthy nations.
Others caution, however, that the pressure on sterling will be
tempered by signs that the UK and the US economies are stabilising
after the "free-fall" that marked the six months that sandwiched
Christmas.
Better figures last week from the services sector signalled that the
worst of the recession may be over. According to Capital Economics,
sterling will be lent support "as long as the green shoots of
recovery flourish."
============AND-------->
2. Sterling slides as pressure on Gordon Brown remains
Sterling came under renewed pressure on foreign exchange markets on
Monday morning as the Labour Party's heavy defeat in the European
elections intensified pressure on Prime Minister Gordon Brown.
By Jamie Dunkley
The results of the European elections, which look set to see Labour
trail in third after the Conservatives and Liberal Democrats, sent
the pound down by a cent by lunchtime in London.
It weakened by a cent to $1.5880 as dealers in London - where the
majority of currency trading takes place - digested the results. The
currency also fell against the euro at about 87p.
Sterling has been on the backfoot since a spate of resignations, and
last week's local election results intensified speculation about
whether Mr Brown can survive in Downing Street. Analysts said that
the continued uncertainty is giving dealers good reason to dump the
pound.
"The longer the political uncertainty continues with Prime Minister
Brown as a lame duck, the more the pound may suffer as a weak UK
government will not be able to present credible solutions for the
crisis," analysts at Commerzbank said.
Investors will be particularly worried that a weakened Government
will not be able to drive through the measures required to cut the
Budget deficit.
"Political problems do matter to a certain extent and right now the
uncertainty is a problem," said Adarsh Sinha, an analyst at Barclays.
"But people it's also a case of people looking for reasons to sell
sterling."
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