''There doesn't really appear to be any upside alternative while the interbank market remains blocked, mortgage applications are down to a quarter of the level seen at the peak of the market, house price growth is plummeting and the labour market is weakening. Unfortunately, against this poor background, we also have to give at least some consideration to the possibility that this turns into a sustained and deeper recession.
"We have to hope that the government's attempt to bail out the banking sector does eventually work - the problem is that until we get to that point, the economy continues to slow as liquidity dries up. Interest rate cuts have come too late to prevent a recession, but at least these are now in place and there could be more to come. If these are delivered speedily and appropriately and timed to have maximum impact on consumer confidence, then this will help to underpin and boost activity once the upturn emerges."
