King is expected to drop GDP growth expectations to just 1.3% for the year, down from the 1.8% the Bank forecast in May and the 2% it predicted earlier this year.
Cable also told the Sunday Times that the UK is in danger of a double dip recession and warned that living standards will continue to come under pressure unless the banks boost growth by lending more.
Ray Boulger, senior technical director at John Charcol, said: “There’s a real risk we’ll have a double dip recession. It was pretty obvious that the GDP estimates were going to be downgraded; the only question was how much they’d be downgraded by.”
Tony Ward, chief executive at Homefunding, said: “Unfortunately the economy has been behaving pretty much in the way that I’ve been predicting for some time that it would, which is going to be really slow.
“The economy has been particularly buoyant in the last 10 to 15 years on the back of highly leveraged activity. The leveraging has dropped entirely out of the market and out of that significantly increased taxes and cuts in public spending and what do you expect? You expect things to slow up.
“There’s been a delay of things coming into the economy like the government measures announced last year, it’s taken a while to come through and the effects are still coming through.
“I still think that the prediction of 1.3% is still on the slightly bullish side. We may see a rise in one quarter and it taken away in the next but I’m seeing it as pretty flat. I’ve seen nothing in the market to stop that.”
Ward added that shadow Chancellor Ed Balls' calls to stimulate economic activity by cutting taxes were unlikely to happen.
“I don’t think the government will do that and nor do I support it either because the problem we’ve got at the moment is on the back of years of leveraged economy,” he said.
“This has got to work its way out of the system so we can have a long-term sustainable market.
“Anything else will give it a quick shot in the arm but it’s not really addressing the problems of the economy.
“So my view is that things are going to be tough for some time and it’s got to be.”
Mark Blackwell, managing director of xit2, said: “Vince Cable is entirely right; the economy is in trouble. There is little spare capacity for it to deal with stagnant economic growth that we see today, never mind the prospect of a double-dip.
“From the point of view of the property market, borrowers have little room to play with in their budgets as the spiralling cost of commodities has pillaged their household finances.
“With more redundancies, less job creation, lower bonuses, pay cuts, and fewer salary rises all forecast, we should be bracing ourselves for a rise in arrears and repossessions in the coming months.
“Our repossession exchange product, Rex, has already seen a noticeable uplift in repossessions with our main lender clients recently, no doubt as a result of tightening of forbearance rules. The recent headline figures of low arrears and repossessions have cast a veil over the real extent of the danger.”
