A RECORD £15 billion was wiped off the value of the UK's biggest pension schemes in yesterday's global stock market plunge.
Figures published today showed it was the biggest loss recorded in a single day since June 2001.
And investors experienced a roller-coaster ride today after London's FTSE 100 Index swung wildly in volatile trading.
After a dramatic early four
per cent fall for London's leading shares following yesterday's slump, share prices recovered slightly.
Heavy overnight losses in Asian markets triggered the early sell-off as fears over a US recession shook global exchanges.
And the markets could be set for further jolts when US markets open later this afternoon.
But the UK Government insisted the fundamentals of the British economy were still "strong and sound". Cabinet minister Ed Balls, a former Treasury minister and a close ally of Prime Minister Gordon Brown, said the British economy was well-placed to withstand the worst of the global financial turmoil.
He said: "With inflation low, with the Bank of England able to cut interest rates, as we saw just a couple of months ago, I think we are in a strong position.
"But that doesn't mean we aren't going to be affected. Of course we are. It is a global economy and our companies and many of our jobs these days are affected by events around the world."
He said the behaviour of the stock markets showed the global economy was under real pressure. He added: "I think it shows that it is a global issue which we are dealing with.
"The good thing from Britain's point of view, is that inflation is low, our interest rates are low and have come down. The countries which get into difficulty when you have these kind of global problems – and we have had quite a few in the last ten years – are those countries where inflation is going up. They can't cut interest rates.
"Those days are behind us in Britain, we aren't the sick man of the global economy any more. The Bank of England has got flexibility, inflation is low and we will see what happens in the next few months.
"I think the fundamentals of the British economy are still strong and sound and therefore people can have confidence that the economy is going to stay on an even keel, even if it is going to be a tough year."
Japan's Nikkei 225 index nose-dived 5.7 per cent today, which amounted to its biggest percentage drop in nearly ten years – to 12,573.05. Australia's benchmark index sank 7.1 per cent, its steepest slide in nearly 20 years.
Hong Kong's Hang Seng market was down 8.2 per cent in afternoon trading.
In China, the Shanghai Composite index lost 7.2 per cent to plummet to its lowest level since August. And in India, the Bombay Stock Exchange was suspended for an hour because the market fell so steeply.
Markets across Europe also spiralled downward with the Footsie, with early falls seen on French and German exchanges.
CMC Markets trader Matt Buckland said: "Today's picture is skewed by the fact Wall Street was shut yesterday so the first thing traders across the Atlantic will need to do is catch up."
