How low can you go?

That's a question for Sterling. For the last six days the Pound has dropped to increasingly record lows against the Euro. It has now plunged by 30% in the last few months, even the drop when the currency was withdrawn from the ERM was not as great.

The worry is that the low value of sterling will create the need for higher interest rates than would be good for times in a recession. But why is the pound plunging? Because our economy is in a terrible state, and the markets know it! The huge levels of debt is creating a lack of confidence, where others such as Germany have until recently been running a surplus.

I'm afraid that the pound will continue to drop whilst the Government fanny about with small measures and extra borrowing. They need to solve the credit crunch before tinkering at the edges of VAT, the Tories' Loan Guarantee Scheme would be one such solution. Unfortunately the Government seem determined to land the future tax payers with a level of debt greater than those from World War 2. We're doomed Mr Mainwaring.

Squiffy.