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Page last updated at 08:20 GMT, Friday, 19 August 2011 09:20 UK

Economy 'teetering' on edge of recession

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Stocks in Europe have started the day with more losses, after Asian stocks had fallen overnight on continued fears about a global economic slowdown.

A mark of the uncertainty is that money is being channelled into the traditional bunkers - the price of US government debt estimated by the Bank of England is at a 200 year low and UK government bonds are down to a level not seen for 100 years.

Business editor Robert Peston said investors were being "knee-jerk" in their response to the uncertainty.

"When investors, creditors, don't want to take risk, it is very, very difficult for the economy to grow," he said.

"There are tremendous fears at the moment that we are seeing a return to the conditions of the credit crunch of 2007, which in turn could tip us back into a pretty serious recession."

Statistics indicate that we are not yet back in recession, he said, but indicators suggest that "we may well be heading that way".


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