News that the UK economy is set to continue shrinking in 2009 has caused concern amongst financial advice specialists. They are worried that there could be a large increase in the need for debt advice from hard up consumers, and at a time when the system is already struggling to cope.

According to figures released by Ernst and Young, the economy will shrink by 4.5% during 2009, the largest fall in more than 60 years. Their forecast is worse than the official government prediction of 3.5%.

The last few months have seen a lot of changes. For many years the country was enjoying a boom, with house prices increasing every month and credit had never been easier to come by. These situations lead to a lot of consumers getting into financial difficulty, by borrowing more than they could reasonably afford.

Now that the credit crunch, and resultant recession, has turned everything upside down a lot of financial casualties have been left in its wake. The main problems are related to excessive mortgages, as well as high interest loans and too much credit card debt.

Many economists are making gloomy predictions for the future, and believe that the worst may not be behind us yet. Some analysts are of the opinion that the UK could experience a “double dip” recession, where we see the economy improve and stabilise, before shrinking again.

The banks were blamed for much of the current stagnation; as they were accused of not lending enough money to stimulate the economy back into growth. There was also a warning concerning the economic threat of swine flu. The worst case scenario is an extra contraction in the economy of 3% this year, attributed to the illness, followed by a shrinking of 1.2% next year.

The only hope for a quick recovery could be an expansion in world trade that could be exploited by UK exporters whilst the pound is weak.