Global economic conditions have become more difficult in the first half of 2005, both globally and in the UK. And a further worsening is likely over the next year. The threat of recession is low, and our central scenario points to a “soft landing”. But the factors signalling lower growth are more pronounced, and the downside risks are increasing. Huge global imbalances are swelling, and the absence of corrective action limits medium-term growth prospects and could, in extreme circumstances, precipitate a crash.
