Recession Risk March 30th, 2008

Lehman Brothers has issued a report that states the UK faces a one in three chance of going in to recession during the next two years. Global financial issues caused by the credit crunch, higher mortgage rates and reduced availablility of mortgage deals will finally lead to a slowdown in consumer spending. Adding up all these factors means the prospect of a recession won’t go away.

It is expected that the pressures on the economy will lead to lower growth, thus requiring the Bank of England to reduce interest rates to 4% by the end of the year.

A small correction in house prices and lower interest rates to make debt more affordable could actually be seen as a positive by a good many number of people. Providing we don’t suffer unemployment it should be possible for most of us to weather the potential storm.