United States Recession _ Risk To Us

According to the former chairman of the US Federal Reserve Alan Greenspan, there is a 50-50 chance of a recession in the United States as the sub-prime crisis unravels.  

Although the recent market turmoil, which has been caused by the slowing of housing markets and the sub-prime crisis is not good for economic growth, Mr Greenspan did not think it would be a significant recession in the United States or the United Kingdom.  

He also expects low inflation to come to an end soon, although he could not say when for definite.  These predictions follow the British Bankers Association released figures, which indicate a weakness in gross lending and approvals in August.  

Our view

When the US sneezes, we all catch a cold.  The US Federal Reserve has recently reduced interest rates to try and stimulate their economy.  We expect a further cut after Christmas and this may mean the UK follows suit around March or April time.

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