The UK Economy

Figures on Monday from property consultant Hometrack showed that housing prices in England and Wales fell 8.7 percent in 2008. They fell 0.9 percent in December, showing that prices have now fallen consistently over the last 15 months and 9.3 percent since the credit crisis began.
Adding to gloom about the UK economy were figures from the Chartered Institute of Personnel and Development at the weekend showing that 600,000 UK jobs could be lost in 2009 due to the recession.
In addition, British children's wear retailer Adams will become the latest UK firm to fall into administration (nLS290132), fuelling speculation that more businesses are poised to fail.
A shrinking UK economy, ongoing deterioration in the housing market and rising unemployment are contributing to an grim outlook in 2009, which has battered sterling across the board.

This has fed the belief that the Bank of England will cut rates further -- and perhaps even explore other options to shore up the economy during in the recession -- even after an aggressive round of cuts has left rates at a five-decade low of 2.0 percent, lower than 2.5 percent in the euro zone.
"There's a sense that UK rates will fall closer to zero, and that the BoE may be forced into some sort of quantitative easing, while there's no sense of that in the euro zone," said Daragh Maher, senior currency strategist at Calyon in London.
He added that the negative view of the UK economy will continue to weigh on the pound, although additional weakness in the euro zone economy may start to chip away at the euro's appeal in the new year.