Sterling tumbles as recovery hopes fade

By Daniel Pimlott and Chris Giles

Published: October 23 2009 10:05
Last updated: October 23 2009 21:17
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The pound tumbled on Friday and investors predicted the Bank of England would pump tens of billions of pounds more into rescuing the economy after official figures showed the recession had hit the depths of the 1979-1981 slump.

A 5.9 per cent drop in output from the second quarter of last year means Britain is suffering its longest recession since records began more than 50 years ago and dashed hopes of recovery.

The data surprised City economists and strengthened expectations in financial markets that the Bank would freeze interest rates at their current record low of 0.5 per cent for the whole of next year.

The Conservatives claimed the figures had “destroyed Labour’s claim that Britain was better placed than other countries to weather the storms