Ten reasons to expect an economic downturn

A gloomy prognosis…..

The Sunday Observer runs a feature today on some of the fault-lines in the British economy that could precipitate a sharp economic slowdown in the next year or so

A weakening of the exchange rate - good news for exporters but putting extra pressure on import prices and inflation A full-scale recession in the housing market hitting housing construction, employment and property wealth with an associated impact on consumer confidence A crash in the commercial property sector Risks of a return to protectionism in the global economy China’s continued rapid growth will help to keep world commodity prices high for the rest of us Fears about the investment strategies and motivations of sovereign wealth funds Cost cutting and job losses in the retail sector Will 2008 be the year when personal finances are stretched to such an extent that consumers simply have to tighten their belts and wean themselves off the diet of easy and cheap credit? The credit crunch is already seeing to that - fixed rate mortgages for example are becoming much more expensive The sizeable and growing budget deficit will put enormous pressure on Chancellor Alastair Darling to curb the growth of public spending just as the economy is entering a downturn phase Plenty of pessimism here - read the rest of the article here. Of course it is easy to over-do the doom and gloom especially as the economy is growing at a pretty decent rate at the moment. The Centre for Business and Economic Research are quoted here as saying that a UK recession remains unlikely especially if the Bank of England is able to reduce interest rates - the January meeting of the MPC is this week - a rate cut this time around does not appear too likely. Latest charts on the UK economic cycle UK GDP Growth: View image UK growth and interest rates: View image Aggregate demand: View image