City Financial: recession is a certainty

He also sees inflation falling sharply once the oil price increases drop out of the year-on-year comparison, such that the headline rate will dip below the core rate next year. While this will allow scope for interest rates to be cut, Williams sees little chance of this happening just yet. Referring to the constraints that policymakers are facing, he said: "There is little room on the fiscal side, so all we have is the 'one club golfer' and the longer rates stay at 5pc, the worse it will be." In time, he sees interest rates being cut quite sharply. "UK base rates will go a lot low...