31-03-2008
Report raises possibility of UK recession
News by Adfero for Simply Business - independent providers of public liability insurance, business finance, landlord insurance, buy-to-let mortgages & commercial mortgages.
A new report by Lehman Brothers has noted the possibility of the UK entering into a recession.
According to the findings of the investment bank's report, over the next two-two year period, the UK is at risk of entering into a recessionary period and it will become necessary for the Bank of England's monetary policy committee to reduce interest rates to at least four per cent.
"It has become clear that the banking system - and hence the credit creation process - is under considerable strain," said the bank, in a report by the BBC.
"Given the importance of housing wealth for consumer spending, this points to an economic slowdown that could last some time."
Lehman Brothers believes the probability of the UK entering into a recession is presently one-in-three.
Currently, the UK has interest rates of 5.25 per cent and inflation is currently 2.5 per cent, according to data released by the Bank of England.