An analysts believes that the US is headed to another recession and that it could mean disastrous
consequences for Britain.
Legal &
General Investment Management Economist James Garrick said the US is showing
signs that things are going wrong.
Legal &
General, which watches over British pension savings, has reduced risk numbers
in the
United Kingdom. However, Garrick warns that the corporate credit cycle
has "become vicious" with weaker growth. Low corporate profits due to
low oil prices and China's slowdown is filtering through a rising numbers of
loans that had continuously defaulted.
The
situation is set to be exacerbated as America's central bank - the Federal Reserve
(the Fed) - is expected to continue raising interest rates this year, in
reaction to low unemployment and rising wages.
Mr Garrick
said: "The Fed will be "damned if you do [raise rates], damned if you
don't."
He added:
"This is the same problem central banks faced in 2007, if they hiked rates
they exacerbated the credit crunch; but if they left rates unchanged, inflation
would have got out of control."
