The global credit crunch made its way to the UK last summer, and since then has been wreaking havoc in the financial markets in the UK. Many industry officials have said that these effects are set to continue over the coming year and beyond, but just how prepared is Britain for the ongoing effects of the global credit crunch? Unfortunately, one report has suggested that the nation is ill prepared for the ongoing credit crunch effects, and this could mean big problems in the future.

A recent report from the Organisation for Economic Co-operation and Development suggests that, other than the United States, Britain could be the worse prepared leading nation when it comes to the effects of the credit crunch, and is more vulnerable than any of the leading nations apart from the United States. The prime minister’s handling of the economy has received bad press in the report, which states that Gordon Brown’s policies have left Britain in a les than capable state to deal with the problems arising from the credit crunch.

However, the report also went on to indicate that it would not be possible for the Bank of England to be too lax with cutting interest rates in order to boost the economy because of inflation levels spiralling out of control. Interest rates have been kept on hold for the past two months because inflation now stands at 3%, whereas the government target for inflation stands at just 2%.

In fact the report went as far as to suggest that the central bank would have to wait until 2009 now before lowering the interest rates again in order to keep a lid on inflation, despite the effects that this might have on the already slowing economy. A number of gloomy predictions were made in the report from the organisation, and this included house prices falling by 10% by the end of next year, interest rates having to remain on hold until next year, economic growth halving next year, unemployment levels rising to a nine year high, and more.

Following the release of the report opposition parties have taken the opportunity to claim that they were right in saying that Gordon Brown had left the country exposed to the damaging effects of the credit crunch. One Tory spokesperson stated: ‘This worrying report confirms what the Conservative Party has been saying all along - that Gordon Brown failed to fix the roof when the sun was shining. He borrowed in a boom, leaving us with the largest budget deficit of any industrial economy. Now we are all paying the price for his economic mismanagement, with Britain less well prepared than any of its neighbours to weather an economic slowdown.’

A Liberal Democrat official added: ‘This is truly awful news for the Government. It confirms all the worst fears about a deteriorating economy, and the lack of any freedom of manoeuvre due to lax control of government spending on Gordon Brown’s watch.’ The OECD’s research warned that growth will slow to 1.4% next year, the lowest pace since 1992.’

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