The UK might be the nation worst-hit in the world by the credit crunch, economists have claimed.
High personal and government debt levels were cited by the experts as reasons behind the potentially sharp downturn. Moreover, the banking sector - in which the credit crunch originated and has had its biggest effects - is particularly important to the UK economy, when compared to its European rivals.
So far, two major UK banks, Northern Rock and Bradford & Bingley, have had to be taken over by the government after the financial crisis pushed them close to collapse. HBOS has also been forced to merge with Lloyds TSB after its balance sheet came under similar strain.
Speaking to the News of the World Paul Dales, UK economist at Capital Economics, commented: "Europeans are better placed to weather the storm because consumers have saved more and don't have as much debt.
"It's going to be very difficult for families. People will have to stop spending and start saving. The era of easy credit has ended."
Agreeing, Howard Archer at Capital Economics added: "The relative importance of the financial sector to the UK economy, the high consumer debt and the sharply deteriorating housing market make us particularly exposed."
Figures from charity Credit Action show that total personal debt among Britons exceeds £1.4 trillion. This averages out at around £30,000 per adult.
