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PwC predicts possible double dip recession

A leaked report by PwC has today cast doubt upon the UK government plans to overhaul the UK banking system. The report was commissioned by major banks in the UK such as Barclays, HSBC and Royal Bank of Scotland and suggests that the introduction of new rules, to govern capital adequacy and banking liquidity, could actually reduce liquidity in the UK market place and push the UK economy back into recession.

Despite the fact that gross domestic product is forecast to increase by 1% in 2010 and 2% in 2011 the report by PwC suggest that the introduction of new banking rules could actually take 2% off economic growth. This will effectively push the UK economy back into recession in 2010 and make it very difficult to pull away from what could turn into a very deep spiral of depression.

While the fact that the report has been commissioned by the banking industry may suggest a slight bias, there is no doubt that PwC has done its homework with regards to the potential repercussions. This is the first real report into the UK banking industry, with the new regulations set to be put in motion, and is certain to curtail any growing momentum to change the set up of the UK banking sector in these troubled times.

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