The US government shored up two of the country’s biggest lenders yesterday and sent the UK stock market plummeting, it has been reported.
Its central bank bailed-out mortgage giants Fannie Mae and Freddie Mac with $7.5 billion (£3.5 billion) and £30 billion was then slashed of UK valuations.
Ben Bernanke, chairman of the US Federal Reserve, told congress to expect further bad news from the economy.
The Times reported he said: "The possibility of higher energy prices, tighter credit conditions and a still-deeper contraction in housing markets, all represent significant downside risks to the outlook for growth."
The news from the US dragged the FTSE 100 index of top companies to 5,171.9, a three-year low not seen since terrorist attacks on London in October 2005.
Similarities remain between the two economies – the Office of National Statistics revealed UK inflation accelerated to 3.8 per cent in June and both have witnessed falling commercial property prices.
