smallbusiness.co.uk: Helping your business think big

Bad publicity is helping to fuel poor sentiment and pessimism among businesses and consumers, according to Capital Economics.

Jonathan Loynes, chief European economist for the analysts, says that the country's problems are being increased by negative media coverage.

However, he adds, the country is not talking itself into recession as there are underlying factors which provoked the problems in the first place.

Loynes says: 'There is a very real downturn going on with very real consequences.'

The British Chambers of Commerce (BCC) said last month the situation is worse than was first anticipated.

David Kern, economic adviser for the BCC, commented that the outlook for business and the financial sector was 'grim', adding that problems would be 'longer and nastier than expected'.

Research released by PricewaterhouseCoopers has shown the credit crunch has cost the UK economy around £600 billion since it began a year ago.

The report found some £400 billion of this disappeared through house price falls while the rest was lost by financial institutions.

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