Still no major risk of recession

A recent report from the Ernst and Young ITEM club claims that despite the various factors affecting the economy and the financial climate in the UK, the risk of a recession occurring is still pretty low. The economy has suffered a slow down over recent months, and this is expected to continue over the course of this year. However, it is unlikely to end in recession according to the data on the report.

Last year saw a 3.1% expansion in the economy, but according to the report the expansion level for this year will be significantly lower at 1.8%. The report also stated that the Bank of England will most likely cut interest rates a number of times this year, which could help to boost the economy, and added that investments from Asia and the Middle East could help the nation to avoid recession.

The report stated: “We have been living well beyond our means, lured by the offers of cheap no-questions-asked credit. The reversal in the credit markets in 2007 could lead to a sharp fall in economic growth, but we believe there is room for interest rates to be cut to cushion this.”

It also read: “Each week brings more multi-billion dollar investments that are helping many of the financial institutions that have been seriously hit by debt write-offs.”

A comment was also made by an official that is linked to the Ernst and Young ITEM Club. The source stated: “The Treasury failed to take advantage of years of good growth to put our public finances on a sounder basis, so our ability to respond by easing fiscal policy has been compromised.”