Byline: ALEX BRUMMER
THE pound took a rare battering against the euro on the foreign exchanges after the latest batch of surveys suggested that Britain's economy, like that of the US, may be slowing more quickly than expected.
The CBI reports that retail sales were all but flat last month. Moreover, the manufacturing sector appears to be in the doldrums With the Bank of England's Monetary Policy Committee gathering next week and release of the next Inflation Report due on November 16, the betting on the markets is that interest rates may have peaked at 6pc.
This conveniently forgets the last inflation report which showed price rises exceeding the 2.5pc target two years out, unless there were a further tightening of policy.
Certainly, in terms of the strength of the economy, the MPC does not appear to have much to worry about.
The CBI survey of distributive trades shows that sales slowed for the third month in a row - not very good news for shares in the struggling retail sector.
The mid-market, dominated by Marks & Spencer, could be in for further punishment.
It is not helped by the constant drumbeat of bad publicity, added to by last night's Money Programme.
The one retail sector which is booming is discounting. The CBI reports that 'competitive pressures remain strong and price cuts continue unabated'.
That is good for the newcomers to the sector, notably Matalan, which unsheathed a 72pc rise in half-year profits and lots more expansion.
It is not just retail which is struggling. The Purchasing Managers Index slipped below the 50pc benchmark in September. Such a reading normally means the economy is slowing - though confidence may have been shaken last month by the fuel blockades.
The reality is that external factors could change the whole direction of the economy.
The oil price, up from $11 a barrel in early 1999 to $31, is at a 15-year high in real terms.
Undoubtedly, this will have an impact on growth in heavy oil consuming countries.
The only question is how much: the latest National Institute economic review projects growth will be affected by 0.2pc in this calendar year and 0.4pc next among the industrial countries.
There is some evidence to suggest that higher oil prices …