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Recession could end mid-2009, says New Star’s Simon Ward

New Star economist Simon Ward has predicted that the recession could be abated within six months if the Government makes policy changes.

Ward says: “Recent monetary trends are consistent with the recession continuing until mid-2009 but a recovery is still possible later in the year if policy changes to emphasise direct measures to lift money and credit growth.”

But Ward warns that further Bank rate cuts and sterling depreciation are likely to provide little stimulus and may actually prove counterproductive if they serve to accelerate foreign withdrawals from the banking system.

He adds: “Foreigners cut their net sterling lending to UK banks by a further £12bn in November after a £36bn reduction in September and October, according to the latest Bank of England monetary statistics.

“The withdrawal of foreign funding may have contributed to the further tightening of banks’ lending standards over the last three months.”

The stock of foreign net sterling lending to banks stood at £152 billion at the end of November. Ward says this implies the potential for a further significant outflow.


Cutting edge

The chairman of the curiously named Betelgeuse Investment Funds rubbed his eyes wearily. Surely 2009 would be better than last year, he thought. Performance had been shot to pieces, redemptions had been considerable, income was down and redundancies would prove necessary. He gazed disconsolately at the pile of papers his secretary had placed on his desk. The heading of a press cutting caught his eye. “Review of 2009” it said. He picked it up and started to read:

Getting caveat emptor to work

Can you have caveat emptor when you have a powerful financial regulator and an ombudsman that effectively fills in the bits the FSA can’t get to?

AMI cautious on further rate cuts

The Association of Mortgage Intermediaries believes that any further cuts in interest rates this week will simply cloud the real issues facing the UK economy.

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Guide: Johnson Fleming’s managed auto-enrolment service for SMEs

Johnson Fleming has launched its new managed auto-enrolment service, designed to support SME businesses of up to 250 employees. The managed auto-enrolment service is not just about providing businesses with a software system for them to manage themselves, but more about outsourcing the administration of the project and scheme to Johnson Fleming’s auto-enrolment staff.


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