UK likely to suffer recession.

13/02/2008 by Dave.

The UK is more likely to suffer a recession than other European countries because of similarities between the mortgage markets here and in the US.

That is according to director of the London School of Economics Sir Howard Davies.

Sir Howard made the comments during an appearance on BBC Two’s ‘Daily Politics’ show, on which he also said that it is “pretty clear now” that the US will fall into recession.

“This recession has got ‘Made in the United States’ written all over it and therefore to that extent you have to sympathise with anybody trying to cope with the British economy and the British financial system in these circumstances,” he commented. “I do think there will be a recession in the US; that is pretty clear now.

“In Germany house prices have not risen for a decade. In the UK they have gone up twice in a decade. Therefore we exhibit the same features of our financial system as the Americans do.

“Therefore if there is a crisis of confidence in mortgages in America, people look around the world and ask which other countries have had a run up in house prices where mortgage debt has expanded, and we have,” continued Sir Howard.

Fears have been growing that the UK will be hit by recession since the US sub-prime mortgage market collapsed, leading to the global credit crunch.