UK recession risk 'higher than 2001'

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Investors should exercise caution over the coming months as the UK is far more likely to suffer a recession than it was in 2001, according to James Carrick, investment strategist at Legal & General Investment Management (LGIM).

Carrick says a large number of economic indicators are worrying and the Bank of England has limited room for manoeuvre, which could result in major problems for the UK. LGIM believes the Bank of England’s current forecast, that growth will be below trend in 2008 and recover in 2009, is over-optimistic and the UK is as much at risk of recession as the US. “More indicators are signalling danger now than before the 2001 economic downturn, despite a weaker pound,” says Carrick. “The economy is borrowing more now than it was then and lending standards appear to have been tightened aggressivel...

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