2008 is likely to see the UK economy rebalancing, as opposed to going into recession, so predicts the Item Club Forecast from Ernst &Young.
Britons are likely to cut spending and begin saving . Personal savings are to increase, with consumer spending as well as house price growth being forecast to slow down.
The risks of a domestic recession are still low.
It is anticipated that in 2008 Brits are going to concentrate on saving and not so much on spending, with household expenditure expected to increase by only 2% in 2008, and 2.2% in 2009.
This time last year we were living beyond our means, attracted by offers of cheap and easy credit .
Most families from now on are going to have to get a grip of their finances . They cannot afford to dip into housing equity to maintain growth in spending.
The re balancing economy is likely to hit public finances, ensuring the government to increases its borrowing as tax receipts fall.
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2008 Signifies Slow House Price Growth Tue, 22 Jan 2008
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