Apparently statistics show that Britain always wins its first gold medal on the fifth day of the Olympics. Today was the fifth day and the statistics proved to be eerily accurate. After 3 bronze medals and two silvers Britain finally bagged a gold. An incredible performance saw Glover and Stanning finish the woman’s paired rowing victorious, elated and a source of national pride.
Whilst this is fantastic news for Team GB, the city firm Fathom Consulting has rained on the British parade, issuing a stark warning.
Fathom Consulting asserted that should the euro-zone break up and the single currency fail, output would sink and prices would drop in a depression that would impact and encompass the total global economy. They predicted that should the euro fragment the currency bloc would experience an output loss of 7 per cent, with the weaker country’s GDP’s declining by more than 11 per cent.
If this development should occur Fathom forecast that the Bank of England (BOE) would increase its credit creation from £375 billion to £1 trillion through quantitative easing.
They went on to state that the downfall of the euro-zone would have particularly damaging consequences for the Britain, ‘failure to save the Euro will result in even greater costs, for everyone; not least for the UK’.
Fathom argued that such an event could herald UK economic contraction of more than five per cent, a dip significantly more severe than experienced in 2009 (when the economy contracted by 4 per cent). Fathom did admit that its central case actually assumed that the required steps would be taken by policymakers to keep the monetary union afloat.
But even with this scenario Fathom’s outlook was grim. If the single currency survives they still expect the UK economy to contract this year and experience only slow growth in 2013.
Director of Fathom Consulting Erik Britton stressed: ‘There is no recovery in the UK. It’s not down to the euro; it’s not down to austerity. More creative measures are now essential. The [BOE’s] Funding for Lending scheme is a start, but it’s not enough. The painful but necessary solution is to write off the bad debts in the housing sector. Without that we are doomed to repeat the experiences of Japan: [who experienced a financial crisis at the close of the 1980’s] two decades of lost growth and counting.’
On a lighter note, Britain has secured a second gold medal this afternoon (they’re just like buses aren’t they?) Tour de France winner Bradley Wiggins stormed the cycling time trial, becoming the most decorated British Olympian in history. GO WIGGY!
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