Recession fears could hit families

BRITISH families could be devastated by falling house prices, soaring debts and shrinking pension funds, world financial experts warned yesterday.

People cannot depend on the state or big business to protect them from economic disaster, said the International Monetary Fund.

The chilling warning came just minutes after the date of the General Election was confirmed. It was an immediate setback for the Labour Party, which intends to capitalise on its economic record.

The IMF's Global Financial Stability Report said the UK economy was still in good shape but warned people not to be complacent. Interest rates could rise by more than expected - beyond 5% - if the dollar remains weak and inflation picks up, it said.

This could send homeowners' finances spiralling down and even plunge Britain into recession. Those most at risk are homeowners 'in their 30s or 40s who may have recently incurred high debt levels to purchase a home'.

First- time buyers who have stretched their finances could also suffer badly. The experts warned that families should not expect house prices to keep rising rapidly, nor should they expect their homes to support them when they retire.

Instead, families must start saving more because British people are so heavily indebted and pension schemes have become far less generous-than they used to be. Since Labour's devastating tax swoop on the pensions industry in 1997, membership of pension schemes has dived. Now only 15% of new employees join their company schemes.