Families and companies will suffer as financial crisis infects real economy say analysts

Families and companies will soon start to suffer because of the financial crisis as banking turmoil helps create a "perfect storm" in the economy. By Stephen Adams and James Kirkup Chaos in the financial system has so far largely been felt by bankers and in the markets, with the "real economy" yet to feel the pain. But the crisis will quickly mean that more people lose their jobs and houses. High street sales are set to slump as cash-strapped shoppers stay at home. The rising cost of borrowing and the lack of available finance will help tip the British economy into a recession that could last as long as four years, according to one forecast. Over the weekend Ernst & Young released a report which showed British companies issued 111 profit warnings in the third quarter of 2008, the highest number since 2001. Andrew Wollaston,... [read full story]