The head of Barclays bank predicted today that the economic gloom gripping the UK would deepen further, with house prices set to tumble as unemployment figures soar.
John Varley, Group Chief Executive of Barclays, painted a bleak outlook predicting that property prices could fall by up to 30 per cent.
In an interview with Sky News, the bank boss also criticised mortgage borrowing levels over the last decade. The comments will be seen as highly significant in the City as they come from such an eminent figure.
Mr Varley warned that the UK was only "halfway" through the slump with house prices set for even greater falls. He said: "Our view was that from the top to the bottom, you would see a fall of something like 25 to 30 per cent.
"I suspect we're about halfway through that at the moment. I mean that slowdown, the negative house price inflation started in 2007, it's accelerated in 2008.
"We're probably about halfway through that period, so in other words we've got another 10 to 15 per cent to fall between now and the end of next year. That would be our assessment."
ROYAL BANK OF SCOTLAND IS unlikely to go ahead with a sale of its insurance units - which include the Direct Line and Churchill brands - unless market conditions markedly improve in coming weeks, as it struggles to attract enticing bids in a dismal financing environment, The Independent reports.
The bank will take the stalled auction, which has been going since April, into thenew year in the hope that it can besalvaged as the disintegrating M&A market takes its toll on the ambitious plan to release more than £5bn to pay down debt. But there seems little chance of a breakthrough. As banks, worried about their balance sheets, refuse to lendonattractive terms for takeovers, many companies are having trouble selling assets.
This year has seen the highest number of withdrawn deals on record as buyers face trouble financing buys, according to the data consultancy Dealogic.
THE POUND WAS UNDER FRESH pressure against the euro this morning, at the start of a week in which the health of UK economy will be centre stage, according to The Guardian.
Sterling fell from €1.1150 to €1.1121 in early trading on the currency markets, close to its all-time low, as traders continued to sell the UK currency aggressively. This came a day after Yvette Cooper, chief secretary to the Treasury, confirmed that the government would not intervene to prop up the pound.
A year ago one pound was worth more than €1.40, but it has fallen steadily as the UK economic crisis has deepened. The decline has accelerated in recent weeks, prompting fears of a fresh currency crisis.
IRISH BANK SHARES JUMPED AFTER government announced plans for €10bn (£8.9bn) bail-out of its troubled lenders, The Telegraph reports.
Bank of Ireland shares surged 22pc and Allied Irish Bank rose 7pc in early trading.
The Irish government said in statement: "The government has decided either through the National Pensions Reserve Fund or otherwise, and subject to terms and conditions, to support, alongside existing shareholders and private investors, a recapitalisation programme for credit institutions in Ireland of up to €10bn."
The statement followed a day of meetings involving bank chiefs and minister for finance Brian Lenihan.
Ireland was one of the first countries to respond to the credit crisis with a two-year guarantee for bank liabilities worth some €440bn, but it has not bailed out or nationalised any banks.
Contact: Scott Sinclair, News Editor, 020 7484 9791 - [email protected]IFAonline
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