Growing evidence that worldwide bank rescue plans have come too late to avert a deep global recession sent stock markets back into sharp decline yesterday.
In New York, the S&P fell more than 9%, its biggest oneday decline in percentage terms since the stock market crash of 1987. The FTSE 100 tumbled 7.2% to 4,079.6, less than 300 points above its low last Friday.
Investor fears were fuelled by bad economic data on both sides of the Atlantic and signs that emerging economies appeared more vulnerable than previously thought to the world slowdown.
In the UK, the unemployment rate leapt half a percentage point to 5.7% in the three months to August compared with the previous quarter, its biggest rise since 1991. Unemployment rose by 164,000 to 1.79m. Many forecasters expect the rate to rise to above 7% in the coming year as companies stop hoarding labour as their financial positions deteriorate.
The total in employment fell by 122,000 to 29.41m in the quarter to the end of August, the biggest fall since 1993.
In the US, retail sales dropped 1.2% in September, the sharpest fall for three years, leaving them 1% lower than a year earlier, signalling that consumers were deterred from spending by the financial sector collapses throughout the month.
Ben Bernanke, Federal Reserve chairman, warned that even if bank rescue plans succeeded in stabilising financial markets, 'broader economic recovery will not happen right away'.
Financial Times, The Times, Daily Telegraph