Economic Outlook - HSBC 2009

The key points from the recently published Economic Outlook from HSBC were as follows:

• The global economy is facing its biggest crisis since the 1930s. Savage deleveraging and financial system failures have caused a downturn on a par with the oil shocks of the mid 1970s and early 1980s. The task facing governments and policymakers is being made more difficult by the hoarding of cash and fears of deflation.

• Recession is now a reality for the UK for the first time since 1992. The heavily indebted consumer sector has been retrenching, and GDP growth has turned negative. Among the consequences that are now starting to emerge are rising unemployment and more business failures.

• The authorities have responded decisively and early in the cycle. Interest rates are at their lowest since 1951, sterling has hit an all-time low against the euro and fiscal policy has been loosened appreciably. These were the levers that worked in 1992 but their effectiveness during 2009 could be blunted by continuing problems in the financial sector.

• All industry sectors are showing signs of strain and the key surveys report confidence levels sinking across the board. All regions are therefore being affected. HM Treasury has predicted a short and shallow recession (‘V’ shaped) but it is more likely to be longer and deeper (‘U’ shaped).

To read the whole document - please click here: http://www.ukba.co.uk/HSBCOutlookJan2009.pdf

http://www.ukba.co.uk