The UK economy has suffered because of “major global shocks”, the International Monetary Fund (IMF) said.
In its regular check of the country’s financial health, it noted inflationary expectations were on the rise and predicted falling growth.
“With tight credit conditions, rapidly falling house prices, depressed equity prices, and weak income growth, private consumption and investment are projected to slow sharply,” mission chief for UK, Ajai Chopra commented.
The UK has benefited from 15 years of success, although the IMF has now predicted growth will slow to 1.4 per cent this year and 1.1 per cent in 2009.
Mr Chopra warned there is a possibility the situation could worsen and recommended fiscal policy be tightened over the next two years.
Commercial property has suffered as a result of current economic pressures, but is now increasingly seen as an investment opportunity for cash-rich funds.