The UK economy has experienced a long period of
economic growth from 1993 - 2008. However, this
unprecedented period of unbroken economic growth is
coming to an end.
The UK economy is experiencing a number of problems.
Credit crunch leading to shortage of borrowing and
lending Falling house prices, which is reducing
consumer confidence and consumer spending.Record
debt levels which leave little room for manoeuvre in
a recession.Cost push inflation making it difficult
for the MPC to cut rates. Inflation well above the
government's target of 2%Increased government
borrowing, as the cyclical downturn worsens the
governments finances.
Global economic downturn causing lower exports.
e.g. even the devaluation in the pound has done
little to boost growth.
Persistent weakness in Manufacturing sector -
contributing to persistent current account deficit.
In the next 12 months, growth will slow and the
economy will enter recession. However, with the
slowdown in growth and lower oil prices, inflation
will fall enabling lower interest rates. This will
help the economy to recover.
The housing market will struggle to recover
whilst the shortage of mortgage finance persists.
Also whilst house prices are falling people won't
want to buy so the problem will be exacerbated.
Falling house prices will also continue to have a
negative impact on the economy in 2009. | 
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