L&G recession indicator at 95%

by Gill Montia

Story link: L&G recession indicator at 95%

Legal & General (L&G) is warning Britons that the chances of a recession are high.

The insurer says its recession predictor is now showing a 95% chance of an economic slowdown that would produce two successive quarters of economic contraction.

According to James Carrick, investment strategist at L&G Investment Management, the indicators are more pronounced than prior to the economic downturn of 2001.

He points out that the UK economy is more reliant on borrowing than seven years ago and that lending criteria are much tighter.

Even if the credit crisis eases, L&G expects oil prices to push the UK economy into a worse position than following the dotcom crash and it is therefore advising investors to be cautious about UK growth prospects.

Mr Carrick is basing his predictions on the need for a global slowdown that will ease commodity demand, pointing out that it will be countries in the weakest financial positions (including the UK and US) that will bear the brunt of this.

In the case of eurozone countries, L&G is forecasting a 64% chance of recession.