The slowdown in GDP growth to just 0.2% q/q in Q2 has come even before the full effects of the housing market downturn and the credit squeeze have been felt. As such, the UK appears to be heading towards recession. Indeed, the latest business surveys suggest that in Q3 so far, economic growth has ground to a complete halt. What’s more, the sharp fall in the oilprice may go some way to easing the MPC’s inflation concerns. Accordingly, we continue to thinkthat the next move in interest rates will be down, albeit not until November or December.
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