The risk of a recession remains low even though UK economic growth will slow sharply in 2008, a report says. The Ernst & Young ITEM Club, using the Treasury's own model of the economy, expects the economy to expand by 1.8% in 2008 compared with 3.1% last year. It expects interest rates to fall to mitigate the effect of the downturn. One factor in warding off a recession will be investment from cash-rich government controlled funds in Asia and the Middle East, it said.
On the theme of recession, Evan Davis, in his latest blog, considers how to survive an economic slowdown. Should consumers spend or save? He refers to Keynes' 'paradox of thrift' and the significance of the level of savings for the economy.
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