Transcript

ANNOUNCER

The 1 o'clock news from the BBC with Michael Buerk.

MICHAEL BUERK

Good afternoon, it's been another disastrous morning on the London stock exchange. At one point 30 billion pounds was wiped off share values in 3 minutes.

STEPHANIE FLANDERS

We're talking here in the UK about a possible triple dip recession and yet the FTSE at the highest it's been in 5 years, the US market up nearly 10% since the start of the year. I think there's a few things going on, there is some optimism about the real economy really in the US, a feeling that there's a lot of business opportunities in the US and that those will continue despite the arguments between the president and congress over the budget.

We had a bit of good news about the UK economy today, that all important service sector showing much more strength than we'd expected, so there's some of that, but I think the main thing is all the signals that have been coming from central banks; from the US central bank, from the Bank of England, saying that they were going to carry on being very supportive ,we were going to have this very low interest rates loose monetary policy, that means lots of money sloshing around, still, in the global economy, investors know that it needs to find a home and they think asset prices are going to keep going up. But you can't get round it, I mean the financial markets have definitely got quite far ahead of where the real economy is, the governor of the Bank of England voiced some concern about that the other day. We want the real economy to catch up with where the financial markets are, otherwise there's a fear that markets will then come back down to Earth.