Tag Archives: Recession

Iberian economies could face financial crisis

Spain and Portugal could follow Ireland’s meltdown

Portuguese and Spanish economies have been faced with serious fears that their respective economies could face meltdown. With the recent news that Ireland has been forced to be helped with a EU bailout, the Iberian nations could follow suit.The Spanish government have pledged that their economy will reduce its deficit, but the market is not so confident. Also the Portuguese have announced that they aim to slash their deficit this year by 2 points from 9.3%.

I hope that the Iberian nations do not need a bail-out from the EU, but my gut feeling is that they will follow Ireland’s path and need it. This could be very bad news for not just the EU, but for the global recovery. Many fear that the economically damaged nations will re-enter recession, resulting in double-dip recessions. If one or many re-enter, or are allowed to re-enter, recession again it will result in a setback for the global recovery. As much I hope that the Iberian nations are financially sound, I fear that another bail-out could happen soon.

Below is a link to the BBC News article:

Pressure gets too much for Portugal and Spain

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Double-dip recession is feared

Financial concerns fear finance directors

Today, finance directors have feared that a double-dip recession could occur. In a survey by Deloitte, the probability of a double-dip recession rose from 33% to 38%. With volatility in the financial markets, the threat of returning to recession has sparked fears with many finance directors. 

I feel that a double-dip recession will occur because of the instability in the financial sector and the lack of predictability in the economic future. The UK only escaped the recession in January 2010, but since then GDP growth figures have been very small and may show that they could return to negative growth in the future. I feel if a double-dip recession occurs, this could lead another financial meltdown and could take the UK many more years to find its feet in the financial sector. I hope that a double-dip recession does not occur, but with many experts predicting a double-dip, it raises fears as to whether to the UK can cope with another decline. 

Below is the link to the Financial Times article

Finance directors fear double-dip recession

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UK economy may return back to recession

Britain still at risk of a double –dip

On Tuesday 26th January 2010, the Office for National Statistics (ONS) announced that the UK economy had grown 0.1% in the final quarter of 2009. Britain had been in recession for 18 months, and today’s news may be good news. This is an initial estimate and could be revised upwards or even downwards. This could show the UK could be at risk of a double-dip.

Even though Britain grew in Q4 of 2009, it may not be the end of the misery. The likelihood of a double-dip is predicted by KPMG. Even if Britain shows a revised negative growth in Q4 of 2009, or if there is a double-dip in 2010, I think that the UK will be back on the road to recovery within the calendar year.

This economic downturn should teach lessons to all industries, but especially banks. I think bank’s decision making and risk management will improve and prevent another recession in the near future.

Therefore, the results announced today may not mean good news as there is a risk of a double-dip. However, I feel the future will be more secure when we pull ourselves out of it!

Below is the link to the Accountancy Age article on this subject:

http://www.accountancyage.com/accountancyage/news/2256791/uk-economy-risk-double-dip 

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Gordon Brown losing Tobin tax argument

Another tax to repay the government’s losses reaching dead-end

Last weekend the G20 finance ministers met to discuss the global economic climate. Gordon Brown, the Prime Minister, proposed a new tax called Tobin Tax (or to me and you,’ Financial Transaction Tax’). It appears that the PM is losing is battle to create this tax and losing his battle to remain Prime Minister.

I believe that a new tax is not needed and not a feasible way to repay the debt that has burdened the government’s balance sheet. I feel this tax will not prevail and agree with the other G20 countries. In the article (which is linked below) it states that the PM has backing from a fund manager and states that the banks cannot assume trust to resume without significant change. However, I believe that the significant change cannot come in the form of Financial Transaction Tax. I think there are other forms of revenue for the government and Tobin Tax is not one of them.

Below is the link to the Accountancy Age article:

http://www.accountancyage.com/accountancyage/news/2252747/brown-losing-tobin-tax-argument

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