December 22, 2007 (LPAC) – The outlook for British Prime Minister Gordon Brown is getting gloomier with every new revelation about the teetering British economy. The pound, which had been soaring above $2 for three months, had its biggest weekly fall in five weeks this past week. It is now at $1.98, and at a record low against the euro. For the first time in two years, the Bank of England decided, unanimously, to lower interest rates, and the next rate cuts will be bigger.

The City of London policy of drawing in world financial flows is showing its downside. Britain's current-account balance is at the biggest negative level of any G7 nation, at 5.7% of its GDP. A big contributor to this is that foreign earnings on FDI investments in Britain have risen sharply.

The number of first-time house buyers in Britain is the lowest in 27 years, according to Halifax, Britain's biggest mortgage lender. Prices are too high for new buyers, and only 300,000 families could afford homes this year, 5% less than 2006 and 44% less than 2002. Halifax reported that first-time buyers cannot afford to buy the "average" house in 96% of British towns, and even the least expensive homes, row houses, are too expensive for new buyers in over 70% of towns. In many areas, prices are 10 times average local incomes. There are only three places, including the Shetland islands, where prices are "only" 3.5 times local incomes.

The huge inflated bubble over which Brown had presided as Chancellor for the past decade, is imploding. Will the crash of the pound sterling bring down PM Brown?