In the midst of an economic crisis, it is extremely difficult to maintain perspective. The worst banking crisis since the Great Depression has shocked even the most fervent of bears, led to numerous redundancies and exacerbated panic over contagion in the existing economic system. The UK economy has serious problems, with a housing market in freefall and the highest level of consumer debt per capita in the world. However, that it can, at this stage, be described (by Alistair Darling) as "arguably the worst" economic downturn in 60 years, is highly questionable. Britain is not going to return to the rationing of the 1940s, the three-day working week, or the 3m unemployed of the early 1980s. Whilst unemployment will rise sharply, there is a great deal of flexibility in the labour market due to the recent influx of foreign labour. Interest rates are historically low and inflation is slowing as commodity prices fall to reflect the slowdown in the global economy, easing pressure on consumers.

The UK economy enjoyed 63 consecutive quarters of economic growth fuelled by cheap credit. There are going to be painful times ahead for consumers as we wean ourselves off this addictive drug. However, as we enter the New Year, it is important to maintain perspective when forecasting the extent of doom. For those of us who have capital to invest, a prolonged period of asset-price deflation creates attractive buying opportunities.

Philip Shapiro is a managing partner of Synova Capital, a UK private equity fund, chaired by Poju Zabludowicz. He joins us as one of our regular experts in this slot.