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Market dips into bear territory

The UK officially dipped into a bear market this week after the FTSE 100 index declined by more than 20 per cent since its peak last autumn.

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.”

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