Currency watch: So it’s come to this

It has been one of those weeks which would be enough to drive you to drink. The unprecedented looting riots which we’ve seen on our streets in the last few days have shocked and appalled in equal measure.

Who would have thought that the culmination of this seemingly endless period of economic doom and gloom would create the angry scenes we’ve experienced this week.

Perhaps it’s no great surprise that the pain of the last four years have led to this, but I’m quite sure that nobody saw it coming.

There are significant sections of our society who clearly feel completely cut off from the rest of the UK, and we saw the manifestation of this sense of separation this week.

The economy has stumbled its way through 2011 so far, with brief moments of hope – such as the boost served up by the royal wedding – soon tempered by more substandard data from all sectors.

Any talk of green shoots has been well and truly bagged up and recycled in the last few months, and there’s no telling what we can expect next.

The markets have been yo-yoing up and down all week, as we enter a period of readjustment.

Finally, it seems, investors are have woken up to what we all felt we already knew – growth is not coming at any kind of pace and the global economy is unstable.

Anyone who says our recovery is gathering pace is at best an optimist and at worst delusional.

It’s no surprise then that the Bank of England this week slashed its growth forecast for the remainder of the year. If anything, this decision highlights the lack of clarity that everyone has about what is going to happen.

There are rumours that ratings agencies may view any growth downgrade as an excuse to reappraise the UK’s credit rating lower. If so, it will hamstring Osborne’s argument of austerity to prevent “becoming like Greece”.

The fact of the matter is that the UK is like most developed economies at the moment, in that it is not experiencing meaningful growth.

That said, slow growth is preferable to the crushing debts that an expansionist fiscal policy would undoubtedly bring to the UK.

It’s tough to say whether we’re on the right track with any confidence, especially when we turn on the TV to see the streets burning. But what is for sure is that we’re certainly not out of the woods just yet.

Jeremy Cook is chief economist at World First foreign exchange