Lord King, who was Governor of the Bank of England during the 2008 financial crash, has insisted Europe’s single currency could face a disaster if EU member nations cannot commit to full fiscal action. The European Union is yet to agree a 750 billion euro rescue package put forward by Emmanuel Macron and Angela Merkel last month.
The largest-ever bailout has divided the bloc as it would require each member state to take a share of debt.
Speaking on The Daily Telegraph’s Planet Normal podcast, Lord King said: “Unless they take that route financial markets will always be dubious that the euro will be guaranteed to hold together, and therefore there could emerge new sovereign debt crises down the road.”
Lord King also warned Government’s around the world could struggle to repay huge amounts of borrowing which could trigger another economic crisis.
The BoE has already slashed interest rates to a historical low of 0.1 percent, with UK borrowing estimated to hit a record high of £300billion.
The cross-bench peer also insisted banks will “experience significant losses” and insisted even safe investments will now look “more dubious”.
FTSE 100 LIVE: The future of the euro has been thrown into doubt (Image: GETTY)
Meanwhile stocks plummeted on Thursday after rising US coronavirus cases resulted in fears that a second wave of coronavirus could affected economic recovery.
Japan’s Topix index fell 1.3 per cent while Australia’s S&P/ASX 200 and South Korea’s Kospi each dropped 1.9 percent.
Elsewhere, markets in Hong Kong and China were closed for a public holiday today.
Wall Street’s S&P 500 finished 2.6 per cent lower in its worst performance in two weeks.
Futures tipped Wall Street’s S&P 500 to drop another 0.5 percent when trading begins today.
The FTSE 100 has also struggled to overturn early losses and is down by more than one percent.
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3.40pm update – Huawei to build R&D hub in UK
China’s Huawei Technologies said on Thursday it had received planning permission to build a £1 billion UK research and development facility in Cambridgeshire.
The facility will employee around 400 people and focus on the production of optical devices for use in fibre-optic communication systems.
Huawei Vice President Victor Zhang, said this afternoon: “The UK is home to a vibrant and open market, as well as some of the best talent the world has to offer.”
The government are currently reviewing how best to securely deploy Huawei equipment in the country’s 5G networks, after granting the Chinese firm a limited role in January.
FTSE has clawed back some of it’s losses today. (Image: Getty)
3.00pm update: FTSE claws back it’s losses
The FTSE 100 has clawed back some of its losses on Thursday but investors are still remaining cautious as fears of a second wave of coronavirus cases in several US states increases.
The index has grown 1.54 percent from 6029.3, the market’s lowest point at 08:30am this morning to 6128.7.
1.15pm update: Poll says economy likely to bounce back next quarter
The UK economy may be past the worst of the coronavirus pandemic, as a poll predicts a huge bounce back.
June’s Reuters poll predicted that the economy would contract 17.3 percent in the second quarter, however in the third quarter from July-September it predicts growth of 10.5 percent.
12.20pm update: German bonds slashed amid fears of another COVID-19 outbreak
Germany’s benchmark 10-year bond yield has fallen by -0.462 percent, down three base points amid fears of a further COVID-19 oubreak.
11.45am update: FTSE 100 struggles continue
The FTSE 100 continues to struggle this morning, the index on the London Stock Exchange is down 10.28 at 6113.41.
FTSE 100 live: The London Stock exchange has struggled to make gains (Image: GETTY)
11.00am update: FTSE 100 posts losses after early gains
The FTSE 100 index has been thrust back into the red after posting narrow gains of 4.22 at 9.45am.
As of 10.45am the index on the London Stock Exchange was down 14.16 at 6109.53.
10.30am update: European markets post early gains
Stocks across Europe have posted marginal gains this morning with the car manufacturing and healthcare industries leading the way.
The pan-European STOXX 600 has risen by 0.3 percent after falling by as much as 1.2 percent in the earlier session.
In Germany, the DAX index soared by 0.8 percent.
Roger Jones, head of equities at London & Capital said: “Germany has definitely been a bright spot in terms of recovery. I think that the depth of the recession is probably shallower than initially anticipated.”
Mervyn King has warned of another financial crash (Image: GETTY)
9.50am update: Royal Mail axe 2,000 jobs
Around 2,000 management jobs at being axed at Royal Mail as the firm looks to slash costs in the face of the coronavirus crisis.
Royal Mail said the job cuts come as part of a management overhaul under plans to save £330 million over the next two years.
9.30am update: FTSE 100 down 1.3 percent amid second wave fears
The blue-chip FTSE 100 has fallen by 1.3 percent and the mid-cap FTSE 250 by 1.4 percent amid growing fears of another spike in COVID-19 cases.
9.00am update: Early struggles for FTSE 100
The FTSE 100 is down 66.94 points at 6056.75.
8.20am update: Mervyn King throws future of the euro in doubt
Former Governor of the Bank of England Mervyn King has cast doubt over whether the euro will be able to make it through the economic crisis caused by the coronavirus pandemic.
Lord King, who was Governor of the BoE during the 2008 financial crash, has insisted Europe’s single currency could face a disaster if EU member nations cannot commit to full fiscal action.
The European Union is yet to agree a 750 billion euro rescue package put forward by Emmanuel Macron and Angela Merkel last month.
The largest-ever bailout has divided the bloc as it would require each member state to take a share of debt.
Speaking to The Daily Telegraph, Lord King said: “Unless they take that route financial markets will always be dubious that the euro will be guaranteed to hold together, and therefore there could emerge new sovereign debt crises down the road.”
Former Governor of the Bank of England Mervyn King has issued a warning (Image: PA)
8.00am update: FTSE 100 opens
The FTSE 100 has opened at 6123.69.
7.35am update: Former BoE chief issues financial crash warning
Former Governor of the Bank of England Mervyn King has warned the global economy is facing another financial crash
He said: “I think the immediate concern facing us over the next few years is that the very high levels of debt we entered the COVID-19 crisis with are going to be exacerbated by even higher levels of debt.
“So I think we can expect to see many defaults over the next few years as businesses struggle and many governments in various parts of the world will also struggle to repay their debts.
“So I think defaults could be the trigger of another financial crisis down the road.”
7.10am update: Property prices to decline by at least five percent – expert warns
The value of properties around the world is set to decline by at least five percent due to the coronavirus pandemic a leading expert has warned.
Liam Bailey, global head of research at Knight Frank in London said: “Our general view is that prices across most major markets will fall, probably around five percent and in some it could be more significant.”
“The risks are to the downside. The big thing that we don’t know is the potential for a second outbreak and lockdown.
“And if we get another significant lockdown, then there is every chance that prices would fall again.”
5.56am update: China taps World Bank official for US-facing finance post
China is adding a new face to its trade negotiation team by appointing its chief representative at the World Bank to head the Finance Ministry’s international cooperation department, three people with direct knowledge of the matter said.
Yang Yingming, who has been Executive Director for China at the World Bank in Washington since 2016, returns to the finance ministry months after Beijing and Washington completed a Phase 1 agreement that brought a truce to their bitter trade war, although bilateral tensions remain at their worst in decades.
Yang, who is among a group of rising Chinese economic policymakers with international experience, told some of his colleagues recently in Washington that he was returning to China to work on G-20 coordination and Sino-US trade talks, two of them said, speaking on condition of anonymity.
Yang, the finance ministry, and the World Bank’s Beijing office did not immediately respond to requests for comment.
(Additional reporting by Rachel Russell)