Currency watch: Economic hangover to continue

It always seems strange that most people celebrate the start of the New Year so vigorously. It is a party dedicated to the changing of a calendar at the end of the day.

In any case I hope that yours was enjoyable and that you surrounded yourself with friends and family. I can imagine that the drinks industry takes a well-earned rest in the New Year. If only the same could be said for the economy as a whole.
 
The combination of the VAT increase, a still stagnant housing market and December’s shocking weather has meant that the economy in January will have a hangover that will last longer than your furry tongue and woozy head did on 1 January.

The high street has been beset with problems of late and the deluge of snow has done nothing to help (unless you own ‘Rock Salts ‘R’ Us’ of course) and this will likely continue in the first quarter.

Data out at the time of writing suggests that GDP in Q4 is likely to fall to 0.4% from 0.7% in Q3, causing anti-austerity commentators to sharpen the knives to a finer point.

Be under no illusion, we are entering the real eye of the storm now.

Jeremy Cook, chief economist at World First foreign exchange, 07.01.2011