Shares in London continued to be depressed today, despite figures confirming strong growth in the UK economy during the second quarter of 2010.
As trading opened on 28 September just two companies on the FTSE100 were trading shares at higher prices.
Prices were boosted slightly by reassuring data from the Office for National Statistics which followed timely backing for the coalition government’s spending plans from the International Monetary Fund on 27 September.
The ONS confirmed that GDP had increased by 1.2 per cent in the second quarter of 2010, unrevised from the provisional figures.
This meant that gross domestic product was 1.7 per cent higher between April and June in 2010 compared to the same period in 2009. The strong growth suggests the economy has bounced back strongly from the recession but economists continue to predict slowing growth into the autumn.
ONS figures said construction output rose by 9.5 per cent up from the 8.5 per cent estimate, with production industries remaining unrevised at 1.0 per cent growth, Manufacturing output increased by 1.6 per cent.
On 27 September the International Monetary Fund said the UK government’s budget plans to significantly reduce the deficit in the public finances were right to ‘ensure debt sustainability.’
“The plan greatly reduces the risk of a costly loss of confidence in public finances and supports a balanced recovery,” the IMF said.
The coalition government will carry-out a spending review on 20 October, setting out the specific areas where funding will be cut. Chancellor George Osborne is planning to ‘balance the books’ by 2014-2015.
The IMF said inflation which was likely to remain above the 2 per cent target into next year but the increase was due to temporary affects such as VAT rises and it expected inflation to gradually revert back towards the target level.
Markets across Europe were also down as trading opened during on 28 September, with continuing concerns in the Eurozone.
The credit rating agency Moody’s announced on 27 September that it was downgrading the rating given to the bank’s bonds and debt, with concerns investors might have to bear costs related to the troubled bank.
© Fair Investment Company Ltd