The British pound's relentless slide towards parity with the Euro picked up pace after it plunged to another record low against the single European currency. The latest slide saw sterling worth just 1.022 Euros amid expectations for European interest rates to remain higher than in the UK for some time yet.
Sterling has lost 13% of its value against the Euro this month alone as it sinks to yet more historic lows since the currency was introduced in 1999. The pound has also weakened significantly against the US dollar, now worth 1.46 dollars - a far cry from its strength against the greenback this time last year, when it was fetching more than two dollars. Experts are predicting that the pound will soon hit parity with the Euro and may be worth even less, given the forecast for further steep cuts in UK interest rates. Tourist rates are already seeing less than an Euro given for each pound as commission charges add to holidaymakers' woes. The pound's troubles have been compounded by recent economic figures suggesting the Bank will have to pull out all the stops to prevent a deep and prolonged recession. Official figures out before Christmas revealed that the UK is heading towards recession faster than first thought. Revised output figures showed a negative GDP reading of 0.6% in the third quarter - worse than the initial minus 0.5% first estimated by the Office for National Statistics. The gloomier data saw many economists increase rate cut forecasts, with at least another 0.75% reduction thought to be on the cards, which would take the UK bank base rate down to an unprecedented 1.25%. Rates are expected to hit close to zero over the coming year Employment prospects are not encouraging either and 2009 could be the worst for jobs in two decades, with 600,000 workers facing redundancy and others having their pay frozen, according to the Chartered Institute of Personnel and Development (CIPD). The institute, which represents managers and personnel staff, forecast that unemployment will stop short of three million, but it warned that the period between New Year and Easter will be the worst for redundancies since 1991 and warned that a million jobs will have been lost when the recession is over. "This time last year, in the face of some scepticism, the CIPD warned that 2008 would be the UK's worst year for jobs in a decade. It was, but in retrospect it will be seen as merely the slow motion prelude to what will be the worst year for jobs in almost two decades", said chief economist John Philpott. "The CIPD annual barometer forecast is that the UK economy will shed at least 600,000 jobs in 2009. Overall the 18-month period from the start of the recession in mid-2008 until the end of 2009 will witness the loss of around three quarters of a million jobs, equivalent to the total net rise in employment in the preceding three years". "Assuming the economy bottoms out in the second half of 2009, job losses are likely to continue into 2010, in all probability taking the final toll of lost jobs to around one million", underlined CIPD.