"Recession likely" says tv...

[larus]

Here's a comment from a columnist on the FT (when discussing the possibility of a slump, which is more serious that a recession).

"The UK is perhaps more vulnerable, because of the relatively large size of the financial sector in the economy, an over-reliance on a property market that is about to deflate, and chronically low productivity growth in non-financial sectors. There is now clearly the possibility of a severe and prolonged recession, followed by a long period of low growth."

Our economy is based on smoke and mirrors. What do we produce in this country of any real value? We have a government that has accumulated so much debt off the balnce sheet (all this PFI is not included as debt). It had the huge surplusses that Kenneth Clarke was predicting when he was chancellor, the 3G license money, the windfall taxes, a booming econonmy (albeit inbalanced) with high tax income, yet it's still manged to waste it all. "New" labour my arse.

It's accepted that we have no room to move on fiscal policy, we have little room to move on monetary policy due to high commodity prices, therefore the ammunition available now to combat the very real possibility of a recession is extremely limited.

For those of you saying that we won't have a recession; what do you think's going to happen when house prices start coming down due to the lack of funds available to lend to people (due to the credit crunch), and the lending criteria being tightened up. This will then stop people spending as they won't feel as wealthy, and will this in turn leads to a slowing economy.

I fear that we could be in for a tough ride for quite a while.

 

[Gully]

The house price issue is an interesting one, I guess from what this columnist is saying that it is possible the lending institutions could help bring the price of properties down, from where I am sat the market appears to have gone into a period of stagnation. If the lenders refuse to lend people what they are asking then surely the vendors will have to reduce their asking price to secure a sale, unless those trying to buy resort to less affordable means of raising loans, step up the likes of Ocean finance. I had previously thought that a slump in property prices was unlikely because demand outstripped supply, it may be that this will not be as important a factor as had been predicted, maybe prices will start to fall.

 

[withdeanwombat]

If tv says it,it must be true.................mustn't it?

 

[The Oldman]

there will be a recession, the only reason we didn't had one the last time ther was a world recession was because of the cheap loans and credit cards deals + rising house prices to borrow against,
now, with the housing market prices over inflated, and banks tightening up on loans and credit, plus higher fuel and food prices, and no Government budget surplus as there was last time, then there will be a recession sooner rather than later

What he says

 

[Lokki 7]

Basically, the whole financial system is going to collapse. Unemployment is going to skyrocket, house prices plummet and money will become worthless as the global banking system implodes. I strongly suggest that you liquidate all of your assets (including your home) now while they are worth something. Use the money to buy gold, a tin hat and a deposit on a rented flat, then wait for the fun to start.

 

[maffew]

Without a doubt our American side of the business has been hit hard and it's heading our way

thats worrying, what do you tend to do out there, NFL/NBA? do they sit down on demand?

 

[DIFFBROOK]

Well most of the indicators suggest falling growth in the US, which in turn will hit us. Maybe, just maybe China and India economies will cushion some of the effect, but I think we are at least heading for some choppy waters.

The worry is that it will turn itself into a nasty, prolonged and deep recession. The media, shareholders and Govt can all talk itself into recession. Fortunately it looks like the stock market is at least stabilising and not going into panic mode. Also good news that Barclays has set better than expected profits despite credit crunch.

If the Uk is hit with a recession then the UK will be hit hard. We have a budget deficit which means we dont have the capacity to borrow more (unlike if we had a surplus for a rainy day). So it means if public services are to be protected then more taxes (even less internal demand) and public sector pay freeze and job cuts.