The World in 2008

Spiraling global markets, rocketing unemployment, a black man in the White House. The Gateway reviews the year that was 2008.


  • Global equity markets endured one of their worst ever years as stock markets across the globe fell dramatically, culminating in a tumultuous fortnight in October. Over 2008, the FTSE dropped by 31% and the Dow by 24%. Emerging markets exchanges were amongst the worst performers as the Chinese stock exchange saw 65% of its value wiped out.
  • Interest rates: The Bank of England cut interest rates by three percentage points between October and December, taking them to a 57-year low of 2 per cent. In the US, interest rates fell close to zero. The move by central banks to cut rates followed a sharp slowdown in economic growth across the developed world during the course of the years whilst fears over rising inflation subsided during the later months, having reached a 16 year peak of 5.2% in September.
  • The price of oil rose spectacularly during the first half of the year as supply constraints and demand from emerging markets caused a price bubble, peaking at $147 per barrel in July. The spike was followed by a huge fall as the onset of the global recession caused supply to fall below $50 per barrel by the end of the year.
  • Currency markets were also highly volatile as the US Dollar pegged its way back against international currencies, particularly the Pound and the Euro. The Pound fell sharply against both the Euro and the Dollar, nearing parity with the Euro by the year's end and losing 25% against the Dollar during the course of the year
  • Iceland was forced to appeal to the International Monetary Fund for emergency funding after its three largest banks failed and underwent nationalisation, sparking an economic collapse.


  • The year began and ended with news of major corporate fraud. In January Jérôme Kerviel, an index arbitrage trader at Société Générale, lost the company 4.9 billion Euros in an illegal trade whilst December brought news that the veteran Wall Street fund manager, Bernard Madoff, was revealed to have cheated clients out of an incredible $50 billion through a fraudulent investment scheme.
  • The credit crunch claimed a series of high profile scalps as first Bear Stearns (March), then Lehman Brothers (September) were forced to close after finding themselves unable to cope with the debts incurred following their exposure to the sub-prime crisis.
  • Merrill Lynch was bought out by Bank of America in a $50 billion recue deal whilst several of the UK's leading banks underwent a part nationalisation after the Government announced a bail-out plan to ensure the survival of the finance sector.


  • 2008 will undoubtedly be remembered for the election of Barack Obama to the White House. The Democratic candidate negotiated a substantially majority over his Republican counterpart, John McCain, with the US's grim economic forecast widely recognised as the deciding factor amongst the electorate. Six out of ten Americans polled cited the economy as the most pressing issue in their minds when deciding who to vote for.
  • There was political disturbance in Eastern Europe as Russia showed its dominance in the region by invading Georgia following the ex-Soviet state's invasion of the breakaway region of South Ossetia. Further unrest was sparked by Russia's cutting off of its gas supply to neighbouring Ukraine, perpetuating the frayed relationship between the two states.
  • The crisis in Zimbabwe showed no signs of abating as opposing candidate Morgan Tsvangirai was forced to withdraw his candidacy for the nation's presidency following violence and intimidation by the ruling party, Zanu-PF. A planned power-sharing agreement between the two parties later failed to come to fruition. Meanwhile, the country's problems continued to escalate as hyperinflation, food shortages and a cholera epidemic brought threatened to bring the state to its knees.


  • Bradford & Bingley followed in the footsteps of Northern Rock as the mortgage lender was nationalised following failed attempts at raising capital from its shareholders and private equity groups.
  • Woolworths was the largest of several high street chains to go into administration as reduced consumer spending began to have a devastating effect across the retail sector. The company had previously failed to sell its 814 UK stores to a distressed assets firm. Several other high street firms followed in its wake, including Zavvi, MFI and Whittard's.
  • The largest technology merger of all time never was, as Microsoft's $44.6 billion bid for Yahoo collapsed with Yahoo refusing to budge from its higher valuation. Yahoo's shares fell 15 % whilst its chief executive, Jerry Yang had to step aside as the company sought to restore its credibility on Wall Street.

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