Elections are to be held once again in Greece after the main political leaders failed to form a coalition government. The news spooked markets the world over with many institutions preparing for a Greek withdrawal from the Euro.
The latest unemployment figures out of the UK show that the number of people without a job fell by 45,000 during the first quarter of 2012. The countries total figure fell to 2.625m, putting the jobless rate at 8.2%, better than the predicated 8.3%.
The figures have taken many observers by surprise, Howard Archer, chief UK and European economist at IHS Global Insight said: “This is a very surprising set of improved labour market data, which suggest that either the jobs market is proving remarkably resilient in the face of mild recession or the economy is actually performing better than indicated by the modest GDP contraction reported for the first quarter of 2012 and the fourth quarter of 2011.
We still suspect that unemployment is headed higher over the coming months as a consequence of extended soft economic activity, heightened business caution, and public-sector jobs being pared substantially. “
The improvement to the job figures is a boost for the UK and adds to a continuously growing sense of optimism that its recession will be relatively short-lived. The country has seen an improvement in production and retail sales over the past few months.
However the continuing uncertainty in Greece is threatening the recovery of not just the UK but the whole of Europe. The governor of the Bank of England Sir Mervyn King has warned that a Greek withdrawal could have a significant negative impact on the UK’s recovery. As a result of the continuing uncertainty the BoE has cut its growth forecasts for 2012 from 1.2% to 0.8% saying that the economy will not recover fully until 2014. It also expects inflation to stay above its target of 2%.
King warned ominously; “We are navigating through turbulent waters, with the risk of a storm heading our way from the Continent,” he said.
“We don’t know when the storm clouds will move away. But there are good reasons to believe that growth will recover and inflation will fall back. Along the way we will no doubt be buffeted by winds from unexpected quarters.”
The Pound to Euro exchange rate is currently trading at 1.251
The Pound to US Dollar exchange rate is currently trading at 1.592
The Euro to US Dollar exchange rate is currently trading at 1.271
The Euro to Pound exchange rate is currently trading at 0.798
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