Former Chancellor of the Exchequer Nigel Lawson (Lord Lawson), speaking at a House of Lords economic seminar, has called for lower U.K. interest rates. He feels interest rates, not Keynesian-style spending policies or major tax cuts, are the ideal tool to soften the coming economic slump. Lord Lawson expects the recession to be at least as bad as the early 90s if not worse saying “There is lots of bad news still to come and lots of bad debts yet to be revealed. I would be astonished if this is not at least as bad as the early 1990s. Infact I think it will be worse than that-and longer lasting.” The solution he added is “monetary policy and very low interest rates which should be globally concerted.”
Meanwhile in the markets, EUR/USD and cable have both given up a fair amount of the ground made overnight, presently down at 1.3070 and 1.6490 respectively. It is the probability of ECB and BOE rate cuts next week which is helping undermine the euro and pound at present.
