Dubai will break UK Banks

Despite expectations that output would expand by between 0.2% and 0.4% in the final three months of 2009 – the first growth in seven quarters – the chancellor will announce a 4.75% decline in activity in his pre-budget report - much worse than the 3.5% decline forecast in April's budget. The chancellor said today that "new data" showed the economy had been hit much harder than he had expected.
"At the time of the budget, my forecast for growth in 2009 was in line with the average of external forecasters. Since then, new data has shown that most economies, ours included, suffered a severe shock in the first quarter of this year," the chancellor told MPs.

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clipped from www.guardian.co.uk As concerns grew that a fledgling economic rally stimulated by rock-bottom global interest rates might have run its course, the price of crude oil fell by almost $2 a barrel and speculators shunned riskier markets in emerging countries. Banks were the hardest hit stock market sector, and shares in HSBC and Standard Chartered – which are exposed to a property crash in Dubai – fell heavily. Graham Turner, of consultancy GFC Economics, said: "It gives you a picture of the fact that credit problem persists, despite everything that's been done." Turner said the problems in Dubai were indicative of widespread malaise. "Despite having oil, it's still the case that many of these countries had explosive credit growth. It's very clear that in 2010, we've got plenty more problems in store." "This may be the first sign that people are thinking you can't get back to the debt-fuelled halcyon days of 2007.