US downturn leads the way for Britain

The US economy is in trouble - and not just the housing market. With low growth, concerns over inflation and public finances in a mess, things look bad for Britain.

The good news from America is that the world's largest economy may suffer "only a mild recession and sluggish recovery", said Gerard Baker in The Times. The bad news? For all the fashionable chatter about decoupling, "the crisis in Britain is unfolding along remarkably similar lines to the one that has engulfed the US", with Britain six months to a year behind.

The housing market crisis is now well established; prices are down by 5% from their peak on the Halifax index and another set of soft lending numbers this week demonstrate "plenty of scope for further house-price falls in the months ahead", said Capital Economics.

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