Barclays Wealth research raises prospect of recession

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Barclays Wealth research raises prospect of recession

Research published today by Barclays Wealth suggests that the chance of recession in the US has risen to almost 50:50.

The study also predicts that the Bank of England will cut interest rates this month, while the European Central Bank (ECB) will "sit on the sidelines" and wait to make a decision.

Barclays Wealth argues that Europe will not be able to escape the effects of a US recession, if there is one, so it expects pressure on the ECB to cut interest rates to build.

Not all of Barclays' predictions are negative; it also believe any slowdown will be short-lived, envisaging a V-shaped rather than L or U-shaped profile for GDP.

Michael Dicks, head of research and strategy at Barclays Wealth Investment & Product Office, said any hopes that Europe and Asia could avoid being affected by a slowdown in America's economy were "misplaced".

The International Monetary Fund has already predicted weaker growth for the world's developed economies this year, forecasting a growth rate of 4.1 per cent for 2008, down from nearly five per cent last year.
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