GDP figures confirm recession end but figures are “utterly intangible to UK Businesses”

-Investors may be cautious about over-estimating pace of recovery -

Date: January 26, 2010

Data published today confirmed that Britain had exited recession, as economic output expanded after the longest recession in 50 years. The growth rate was slightly worse than the forecast 0.4%, coming in at 0.1% for the fourth quarter.

Sterling faced some selling pressure on the back of the data, falling against the euro 0.53% to €1.1452, and 0.44% to $1.6150 against the US Dollar.

Mark Bolsom, Head of the UK Trading Desk at Travelex, the world’s largest non-bank FX payments specialist, said: “Although a step in the right direction, investors will be disappointed given the huge amount of stimulus employed by the authorities to boost the economy.

“Investors may be cautious about over-estimating the pace of recovery, and concerned that the Bank of England has yet to close the book on Quantitative Easing. We may see the pound lose some value today as a result of this. It is also likely to force the Bank to delay raising interest rates anytime soon. I stand by my forecast that they will remain at 0.5% until 2011.

“And although the data and survey evidence does tell us that the UK exited recession in its four quarter, the figures are utterly intangible to the everyday UK consumer and business.

“The BRC’s disappointing retail sales figures released last week showed that people remain uncertain of their economic future and are not spending. Our business clients have also been telling us for a while that they are concerned about tight credit conditions – this was confirmed by a Bank of England Roundtable held in December.

“Fiscal tightening is around the corner and we are expecting higher taxes and public spending cuts in order to tackle our ballooning deficit. So although we have officially exited recession, it is debateable how much this will have a positive impact on the everyday man. David Cameron’s comment on the Great Recession seems quite accurate.”

Ends

Media enquiries

Jessica Buttress
Head of PR for Travelex Global Business Payments UK
0208 415 4204
077954 497129
Jessica.buttress@travelex.com

Notes to editors
View Travelex releases online at http://www.travelexbusiness.com/uk/about/media-releases

About Travelex
Founded in 1976, Travelex is the world’s largest non-bank foreign exchange and payments specialist; with operations across four continents and 6,000 employees worldwide.

Travelex holds key positions in its three main areas of activity: Global Business Payments (TGBP, which includes Travelex Personal Payments), Currency Services and Card and Mobile Payments. Every year, more than 35,000 corporate clients and 30 million customers trust Travelex to manage their foreign exchange requirements.

Recently recognised by TowerGroup research as Industry Leader for payments innovation for SMEs, Travelex currently handles international payments for over 750 large corporate and financial institutions.

Visit www.travelexbusiness.com/uk for more information or email the press office at jessica.buttress@travelex.com