Are we facing a return to recession?

The outlook does look somewhat gloomy. I say the government needs to create an entrepeneur environment by creating free training and development of ideas through to fruition. Many youngsters have good ideas but no money, kit or premises to get started.

It might be a relief to some that China and India are growing but we have a long way to go before our exports can compete with their goods that they manufacture by paying people a few dollars a day for their labour. I'm in no doubt that it's going to be tough, we have a massive debt, no north sea oil to export, a need to buy oil and gas from foreign countries, a greatly reduce manufacturing industry, no public utilities left to sell, large PFI projects that still need to be paid for, a huge public sector, generous benefits and pensions that are already promised and our wealth expectations have grown. Anyone who thinks we don't have a lot of austerity to look forward to needs to look at the facts. And as for central banks "helping" by implementing more QE, this will only weaken the pound lose our triple A rating and mean government bonds will have to give a very high rate of interest to be sold putting us in much more trouble.

The reason for our economic woes is that the basis of our economic structure is totally inequitable. Any economist or analyst should have seen that a policy of unrealistic, artificially held low bank rates would discourage the flow of the money supply because financial institutions will hold back lending to build up reserves in order to lend at a much higher rate in the future. It is obvious that in the long term interest rates will definitely need to rise. Many people in this country are using their savings to supplement their income and pensions, due to the available interest rates not covering the rising costs of goods and services and are holding back from spending. I regret to say that it is the fault of the BOE, which has been totally blinkered to the reality of economic facts: their money easing programme (QE) was a total and costly disaster and did nothing to get us out of recession but probably made matters worse as if other measures had been taken, we would have come out sooner rather than the last. The over-valued Euro which will, in time, definitely collapse, has a higher base rate than Sterling and it won't be too long before various countries eg Germany, France and Italy will revert to their original currencies so that they can compete on an even basis.

I find it incredulous that the possibility of a return to recession is even questionable. Is everybody walking around with blinkers on? The banking problems have not gone away. Much of this debt is now transferred to Sovereign debt (at the cost of the people), so its now the countries that face financial collapse as well as the banks too. Debt levels will continue to soar. There have still been no steps to separate the Retail from the Investment banks. Just look at the latest US legislation which has more loop-holes than fishnets stockings apparently. It is still hard to believe that we are financially worse off than after World War 2. The private sector will not take up the slack for now, because people are not spending. Things are still contracting and the de-leveraging is not over yet. Stimulus gave the economy(s) quick transfusions, but it didn't really fix anything, it just created greater debt burden in the long run. Ultimately the stimulus has failed and more will just add to the debt levels, with no real benefits to speak of. With every country cutting back it would be a miracle if we did not return to the recession/Great Depression II. Moreover this is different because it is global, it isn't just our country in trouble. So its not like we have lots of blossoming countries to buy all our goods. China's main growth is naturally based on our consumerism, which has shrunk back considerably. The Baltic Dry Shipping index is a clear indicator of the direction of things going forwards. It is rapidly approaching where it was at the March 2009 market low! Domestic and Commercial Real Estate in the US are falling off a cliff. No doubt the same situation applies to many other countries too. There is increasing default on credit card payments and mortgage defaults which means the banks are in possesion of a time bomb in emerging and held debts. That is on top of their exposure to countries that may well default on their debts too. Total UK debt has been reported to be 4 times what they have said previously, 4 Trillion pounds ...ggasp?? Even dodgy accounting is being used to make the banks appear far more profitable than they really are. Wages continue to fall, deflation is starting to take hold another sign of impending doom. All of the Public sector layoff will no doubt be correspondingly matched by private sector layoffs.

Governments still refuse to make cuts where the real money is wasted, such as Defense Spending and Expensive Civil projects. Billions that could easily be saved. They are still in denial. We see the cuts made where the people will suffer the most. We are still fighting the pointless war, pouring Billions in for nothing but the return of our brave soldiers in body bags.

I still the markets hitting bottom by February if not before. After that it is going to be the long slow economic crawl for many years to come. Anyone hoping for a rapid recovery is sadly deluded. Beware the fall, play it safe all the way! Keep it real!

I am not seeing any sign of recovery. On the contrary the only new businesses I see on my high street are most mickey mouse tax dodges with little or no intent of making a profit. Billions have been squandered by Labour and billions owed in taxes have not been collected and nor will they be by firing thounds of HMIRC staff and using an offshore debt collection agency that failed to collect the debts owed to the CSA and is probably owned by a company registed in Delaware USA who refuses to declare ownership details. Does anyone know who does own it? Probably the Mafia!

Secondly, there is but one 'economic cake' and if it is not fairly divided that will lead to massive unrest. The Government are right to stop off the budget balance initiatives but shifting responsibility for control of the state to the voluntary section to avoid the blame will neither work nor help. The problem is that Cameron keeps saying 'We' when he actually means 'You' and not those responsible for this mess. Chris B is right take cover!

I agree with much of what has been written above and would add the following. The demographic make-up of the western economies including the UK also works against recovery. The baby boomers are aproaching retirement in increasing numbers and have passed their 'peak spending' years. They wish to save in order that they may someday retire. Unfortunately private debt is at record levels and savings returns at record lows. The boomers who could spend and get the economy going will not, they will pay down debt and more than offset any lending the banks do undertake.All the time the unfunded liabilities of these nations grows as the boomers begin to draw on their state funded rights!

Nice to see a group of thoughtful sensible comments.

Agree, some excellent reasoned responses here.

Cant help thinking that many of the important valid points raised (lower spending,job losses,paying down debt.etc.) are highly deflationary, yet vast sums pumped into QE. must inevitably devalue the currency.

Inlation or deflation coming to UK???

If anyone can get this forecast right ,they will send us a happy blog from a pleasant tax haven in a sunny climate.