Recession would be "more severe" than any in the past

Britain could be headed for a recession "more severe than any of the ones we have experienced in the past", finance website Fool.co.uk has warned.

David Kuo, head of personal finance at the website, said that some Britons, such as house builders and retailers, already believe themselves to be in a recession.

Fool.co.uk says that economists usually define a recession as two consecutive quarters in which a country's gross domestic product drops - or six months of dwindling business activity.

Mr Kuo said that ten years of prosperity meant that if there were a recession, it will "probably be more severe than any of the ones we have experienced in the past."

He added that since banks are taking fewer risks and lending less, people would no longer have the option of borrowing in the recession as in the past.

The British Chambers of Commerce (Q2) Quarterly Economic Survey, published this week, shows a serious risk of recession.

If trends continue, UK business is one quarter away from recession.

The survey also showed that the credit crunch and rising costs have now hit business and the service sector has been affected more than manufacturing.

source moneynews.co.uk