Recession fears wipe £84bn off the value of Britain’s biggest companies as stock markets tumble across the globe
By Nick Clark
Published: 22 January 2008
It was the day that the fear factor took over. From Asia to South America, share prices tumbled yesterday as the world’s investors gambled that a US recession was now inevitable. In London, the City endured its darkest day since the nadir of 9/11. What Alan Greenspan once called the “irrational exuberance” of traders gambling on rising asset values has gone. In its place, a deep-rooted pessimism has taken hold.
In a single session, a massive £84bn was wiped off the value of Britain’s biggest companies, as the FTSE 100 index plummeted by 5.5 per cent, closing 323.5 points lower at 5578.2. Last week the index dipped beneath the 6,000 mark for the first time since the credit crunch began in August. It was the eighth consecutive day of losses. Since Christmas Eve, the FTSE has dropped by almost 1,000 points and last night analysts were predicting further falls.
While President George Bush has authorised an economic rescue package to address the US sub-prime crisis, market experts believe the plan has come too late. And no one believes the world’s other major economies will remain unscathed as America plunges into an economic downturn. For the world’s biggest companies, recession in an export market as vital as the US can only spell trouble.