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Monday, 19 December 2011

Britain Hit Back At French Jibes

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Currency exchange rates remain relatively unchanged as we enter the final week in the build-up to Christmas; the Pound is trading at 1.190 against the Euro and 1.548 against the US Dollar.

Nick Clegg hit back at France on Friday after days of criticism of the UK economy; he told French PM Nicolas Sarkozy that the barracking was “simply unacceptable” and must stop. The comments were backed by coalition leader David Cameron who agreed that denigrating comments from French officials were unhelpful, especially given the current economic climate. Nick Clegg went on to cite ‘tiredness’ as a potential cause of the tensions in an attempt to smooth things over:

“I just think we all need to go away, have a bit of a hiatus, a bit of time to have Christmas, to eat some mince pies or whatever the French equivalent is. Everyone is a bit tired.”

French ministers will have been pleased to hear that France managed to keep its AAA credit rating, but the Eurozone suffered a blow as Belgium’s rating was cut by 2 notches from AA1 to AA3. Moody’s credit rating agency put the downgrade down to “heightened risks posed by the sustained deterioration in funding conditions across the Eurozone.”

The negativity continued as Ireland announced figures detailing a 1.9% shrinkage in the economy for the last quarter, but there were some positives as Italy’s technocratic government won a crucial confidence vote to allow Mario Monti to push through a €30 billion plus austerity package. The EU also released a draft version of its new fiscal pact, however the treaty changes have generally been considered inadequate by markets as the EU seeks economic resuscitation.

European Central Bank President Mario Draghi spoke to the Financial Times about the future of the Eurozone and ECB intervention; he asserted that the Long Term Financing Operation (LTRO) is not designed to purchase sovereigns, but also stated he was not opposed to the idea; he does not condone additional bond buying, (many investors have heralded the idea as the only solution) but at the same time does not see it as an illegal venture and does not rule it out completely. The interview has seen Draghi come away looking less iron-fist and more accommodative towards unconventional methods of monetary measures.

The Pound has settled at 1.190 against the Euro and the smart money says fluctuations will remain close to this mark as Christmas approaches.

Cutting Edge Current Affairs Courtesy of:
Josh Ferry Woodard 

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