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UK set for deepest recession since 1940

A number of independent think tanks are suggesting that 2009 will see the sharpest fall in UK GDP since the 1940s. This reflects mounting concern that the UK recession could be longer and deeper than anyone had thought throughout 2008. There are also real concerns that we could see that a return of the credit crunch in the first quarter of 2009 with banks set to struggle and possibly need to return to the markets for more funding.

This may be part of the reason why banks have been so unwilling to release excess capital to the mortgage and loan markets to try and refloat the economy at a time when demand and supply are falling faster than ever before. Politicians around the world are struggling to find an answer to the ever puzzling situation which is not responding to literally tens and hundreds of billions of pounds of investment.

The UK government is faster running out of options with interest rates approaching 0%, the UK budget set to grow to a deficit of £1 trillion and taxpayers struggling to cover their costs at the moment. A credit crunch part two could see the UK fall into a severe depression.

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