Mortgage lending has slowed significantly, thousands of jobs have been lost in the City and the house building industry has announced plans to cut almost 8,000 jobs, which will have a knock-on effect on various other businesses.

The house building industry employs two million people and accounts for about nine per cent of gross domestic product.

Architects, builders, electricians, plumbers, engineers, solicitors, estate agents – a vast array of sectors are being hit by the huge slowdown in house completions and sales, as homeowners struggle to switch mortgage lenders, and first time buyers are priced out of the market unless they have a hefty deposit.

House prices have already fallen by nine per cent since last August and experts are not optimistic about the next 12 months, with economists predicting that the housing market could correct itself by as much as a third, having more than trebled in the decade leading up to the outbreak of the credit crisis last summer.

Wolseley, one of the UK’s biggest suppliers to the building industry is expected to announce hundreds of job cuts from its 14,000 strong workforce later this week as part of its £70million cost-cutting plan.

More than £50.2billion of aircraft orders are expected to be cancelled or postponed during the next few years as airlines are forced to cutback or face bankruptcy as the cost of fuel soars.

Recession is defined by three consecutive quarters of market retraction, but some industry experts say that the country’s economy is already retracting, and that it is only a matter of time before we are officially declared as being in a recession.

The third and fourth quarters of 2008 are almost certain to show a decline, says Ashley Seager from the Guardian, and that if the recession stops there, then the UK will have gotten off lightly with a ‘soft landing’. “Given how bumpy and turbulent things feel now as we approach the runway, a hard landing feels much more likely,” he said, “although hopefully a crash can still be ruled out.”

Contrary to the optimism of Henry Paulson, secretary of the United States’ Treasury, who has declared that the worst of the worst of the credit crunch is behind us, two thirds of financial chiefs among the UK’s top 350 companies believe that the worst is yet to come.

The Bank of England voted to keep the base rate at five per cent for the third consecutive month in July, but it must not keep rates high if it is to prevent pushing the country into a full-on slump as it strives to curb inflation, the longest-serving member of the Monetary Policy Committee (MPC), Karen Barker, has said.

On a more optimistic note, Ms Barker told The Times that Britain is likely to escape a severe recession reminiscent of those suffered in the 1980s and 90s, despite a barrage of gloomy economic news in recent weeks.

© Fair Investment Company Ltd