Last week’s Deloitte Economic Review said the UK economy was at its weakest for 15 years, and that recession was a possibility by 2010.

It also forecast a fall in house prices of five per cent by the beginning of next year, and said that the UK would not be bailed out by a strong global economy as it was in 2005.

“The global financial crisis and the associated credit crunch have brought an end to the period of easy credit that in recent years has been the bedrock of rapid rises in house prices,” said Roger Bootle, Deloitte's economic advisor.

These concerns about a looming recession seem to be echoed by the Bank of England, which is set to cut interest rates for the second time in three months on February 7.

But how can you cope with this economic slowdown? Here are some practical tips to make sure that recession does not hit too close to home:

Spend less money.

This is a bit of a no-brainer. As Mr Micawber sagely pointed out in David Copperfield: ‘Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.’ If you haven’t got it then don’t spend it. A little bit of frugality this year will leave you much better off in the long run. If you are having trouble doing this then try writing down a budget for each week. Start off with all the essentials such as bills and mortgage payments, and then gradually work down deciding what you re
ally do and don’t need. It is amazing how much you can save just by working out whether that 64 inch flatscreen is a genuine necessity.

Cut your bills.

It is amazing how much you can save just by ringing around a few companies, or logging on to a price comparison site. If you have been on the same gas or electricity deal for more than two years then it is highly likely that you can cut your bill. If you are so loyal to your provider that you can’t bear to leave, try ringing them up and asking for a cheaper tariff. Mobile phone companies in particular are very quick to offer discounts to customers who mention a cheaper deal elsewhere. And think about whether you really need to upgrade your phone, or whether cheaper line rental would leave you happier instead.

Reduce your debts.

There is no point having money in savings accounts if you’re paying out outrageous interest on a credit card every month. Pay a lump sum on your credit card, and use existing savings rather than get further into debt – it is never cheaper to borrow. Make sure that you are paying the lowest rate possible on any loans you have.

Think about changing mortgage provider.

During a recession interest rates are normally cut which can be good news for homeowners. Changing to a tracker mortgage can save money, although banks have recently put up the cost of some packages in anticipation of such cuts. These deals can be risky however, so think carefully about what is best for you. Taking a fixed-rate deal may mean you miss out on possible rate cuts, but gives you the peace of mind of knowing what you will pay each month.