The index opened sharply down on Tuesday morning, reaching as low as 5,359, technically marking a bear phase and sparking fresh fears of a recession, although the index closed on 5,440.
F&C UK growth & income fund manager Ted Scott believes the UK is yet to enter a recession in economic terms but warns the situation looks set to worsen.
He says: “The UK economy has only just begun to slow after a robust 2007 when GDP growth was above trend. Despite months of gloomy headlines, house prices have so far only fallen a few per cent from their peaks and unemployment is low, albeit rising.
“Therefore, if a recession does become a reality – and the risks lean that way – there could be further to go.”
Informed Choice director Martin Bamford says: “It is dangerous when we see a slowdown in different sectors but this all comes amid a weak backdrop. We are technically in a bear market but unemployment is relatively low and house prices have only dipped fractionally. Only time will tell if we will enter a period of recession.”