The UK will be spared an economic downturn this year, but a recession next year or in 2010 remains possible, according to New Star's chief economist, Simon Ward.
On growth, he said: "I expect to see some improvement in the second half of 2008, but we may see bigger problems in 2009 or 2010". The need to contain rising inflationary pressures through a tightening of monetary policy could tip the economy into recession, explained Ward. He noted that the UK's 'Recession Probability Indicator' was "not yet at a critical level", but that it had spiked up sharply, in recent months. This indicator is currently consistent with growth of just 1pc over the next year and the UK is nearing a 'tipping point' that would dictate whether or not a recession materi...
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