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UK Economic Growth Set To Slow In 2008 And 2009

A recent survey by Reuters has shown that many analysts expect the slowdown in the UK economy to continue into 2009 although very few believe that it will actually turn into a full blown recession. As inflation starts to creep higher the Bank of England will not have the benefit of reducing interest rates to increase economic activity. This has put the UK in a very difficult situation and one which may see more pain before we hit the bottom of the market.

In many ways we are seeing the “tail wagging the dog” as inflation and a lack of finance bring the UK economy to a grinding halt. This has had a major knock on affect in the housing market, the business sector and personal debt, all situations which you would normally expect to lead the economy lower. So in many ways this is a unique situation and one which will take a fair amount of work to resolve.

If we think of the UK economy as a large ship which has turned, it can be very difficult and take some time to steer it back on course. Action taken now will not have an impact until very much further down the line.

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