Recession ‘95% likely’ in Britain

I’d say that the UK is looking a lot like the U.S. looked a year or so ago, with high consumer debt loads and high property prices. What’s the likelihood of recession. A near certainty.

“Over to the strategy team at Legal and General. They’ve charted a ‘heat map’ of factors that could push us over the cliff edge. And it’s enough to get anyone steamed up…

…Legal and General’s SatNav is now on red alert. According the them there’s now a 95% chance that Britain is heading for recession!”

The question of course is why. And I have to agree with their reasoning and it’s this reasoning that makes them look an awful lot like the U.S. did in 2007.

“So after examining sky-high personal debt levels, soaring oil prices, crimped bank lending and tension in the money markets, as well as a few other areas of possible pain, the strategists reckon that the odds of Britain suffering a recession are now about 95%. And what raises the stakes so high is the likelihood that everything will go wrong at exactly the same time. Which also makes it a racing certainty that the recession will prove to be just as bad as both the early 1990s and early 1980s.

How long will it last? The official description of recession by economists is “two quarters of negative growth” (only economists could actually talk about minus numbers as negative growth).

The Legal eagles have been pretty downbeat for some while, but until now have been telling us to expect perhaps two years of the economy going nowhere.

But recently the L&G ‘recession model’ has taken a real turn for the worse, and is now warning of a long decline in economic activity, by as much as 2% year-on-year. That may not sound huge, but if it happens, life could get very unpleasant and we’ll all feel the squeeze.”

I’d love to hear ‘on the ground’ stories from anyone in the UK about how they see things right now.

Source
MoneyWeek: Why there’s a 95% chance of a recession, 22 May 2008

See also: Other posts under the label ‘UK.’