It has become clearer over the last month that the economic slowdown well underway. The 0.4% rise in real GDP in the first quarter was the smallest in three years and reflected more modest activity in both the services and industrial sectors. What’s more, the latest surveys suggest that activity has slowed further in the second quarter. And this is before the full force of the credit crunch and housing downturn has been felt. We still expect the economy to grow by around 1.7% this year and just 1% or so in 2009, with a significant chance (perhaps 1 in 3) of a technical recession.
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