As the British economy continues to struggle partly due to the fallout of the sub-prime mortgage crisis that started in the US months ago, speculations are rife that the worst may not be over.

More turbulence is expected this week as the impact of the second largest banking failure in America extends to other parts of the world.

This follows the extraordinary decision by the US Federal Reserve to take over the California bank, Indymac, and the attempt by the US Government to dismiss rumour that the country’s two largest mortgage lenders, Fannie May and Freddie Mac were also facing nationalisation.

There were fears that they may still need an urgent life-line from the government this week after the huge fall of their shares.

Experts are, however, of the opinion that this may be signifying what is likely to soon follow suit in the UK.

A powerful City commentator and chairman of stockbrokers Collins Stewart, Terry Smith warned that: “We are nearer the beginning than the end. I’m afraid there is going to be more pain – quite a lot, actually.”