The British economy isn’t looking so cheeky right now, as the economy is mirroring that of the United States’, and its exchange traded fund (ETF) is bearing the brunt of it.

iShares MSCI United Kingdom (EWU) is a 12-year-old fund that has $1.2 billion in assets and tracks the index performance of MSCI United Kingdom. In 2006 it returned 30% and nearly a year later only managed to give back 8%. What happened?

Joanne Von Alroth for Investors Business Daily reports that the same credit crisis haunting the United States can be seen in the United Kingdom. Add to that a troubled housing market and a reduction in consumer spending and the outlook is glum. Last week the Bank of England froze rates at 5.5% in anticipation of slower growth and inflation. Sound familiar?

Also, the hardest hit sector has been the financials. What’s more, the British rely heavily on credit, much more than their U.S. counterparts. British officials are looking to other nations for help before the bleeding gets unstoppable.


The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.