Mervyn King's comments last night that Britian stands on the brink of a prolonged recession may have been the obvious to those who have been reporting on the economy for the past 12 months but not it seems to the financial markets.

The pound fell in overnight trading aginst the Dollar and kicked off when markets opened this morning.It currently stands at $1.6405 just off its lowest levels.

Shares are also falling after overnight falls in the Far East.The FTSE is currently down 1.88%

Guido is in pessimistic mood

Government borrowing is at record levels, unemployment is heading towards two million, car workers are on a 3-day week, public sector workers are threatening strikes, nationalisation is back, Deripaska-owned Leyland is even in back the news and we are entering a recession. To complete the whole 70s era feel we have a sterling collapse. 6% last night, 20% since the beginning of the year.