Like most of us during the last couple of years the recession has had a direct impact on my own family’s finances.

Image: Tommy realised that his childcare vouchers had expired

It’s fair to say that belts have been tightened at Tillcock towers and luxuries have been few and far between. Now it seems that my three year old son is set to become financially crunched.

Politicians have been urged to retain child trust funds (CTFs) in the wake of Shadow Chancellor George Osborne’s announcement that the Conservative Party would cut spending on the funds. Should the party win next year’s General Election, new spending on CTFs would be stopped for all but the poorest third of families. The Liberal Democrats have said they would scrap the scheme altogether.

The plans, however, have unsurprisingly drawn strong criticism from many quarters. Forgetting the political point scoring, I believe that the biggest mistake relates to the potential loss to the economy. For the first 18 years the CTF money will be invested in British companies. In 2020, when the first eligible children start to turn 18, it will be fed back into the economy; probably at quite a rate.

It is not just via CTFs that children are being hit. The Government's decision to abolish tax relief on childcare vouchers has also drawn strong criticism and gathered pace, with childcare providers lobbying politicians on the issue and a petition set up against the plans attracting more than 20,000 signatures. The Labour plans which as they stand could result in up to £1,195 in tax savings for a working parent being lost. I can once again speak from experience and say that this popular scheme has allowed many women to return to work after the birth of a child.

I am realistic enough to acknowledge that as a nation we need to make huge savings before UK plc files for bankruptcy. There is a widely held view, primarily from those not benefiting, that all these methods of financial assistance are unfair on the tax payers unable to claim help. Whilst I understand this viewpoint, in the words of Whitney Houston, the children are our future. I also know that I will for the rest of my life be paying for the financial mistakes we have witnessed. I am, however, a little annoyed at having to explain the fiscal realities of life to my son, especially if Santa has his credit lines pulled later in the year.

Lee Tillcock, Editor of Moneyfacts

Falling asking prices and interest rates has seen buyer interest in the housing market increase for the fourth consecutive month, according to the Royal Institution of Chartered Surveyors (RICS). However, despite potential buyers increasingly coming to the fore, demand has not yet translated into sales, with the average number of transactions completed per agency in the last three months dropping to 9.5, the lowest figure in the survey's 30 year history. London agents are suffering the most, selling on average just six properties in the last three months.

Jeremy Leaf, RICS spokesperson, has called on the Government to provide guarantees for the new issuance of residential mortgage backed securities in order to give the market a much needed boost. "Without further intervention the housing market will continue to stagnate and the opportunity to take advantage of this renewed interest could be lost which will inevitably have serious implications for the wider economy," he added.

The current recession will be worse than that of the early 1990s, according to the latest forecast from the British Chambers of Commerce (BCC). The current downturn is now predicted to result in a cumulative decline in output of 3.7%, against the 2.5% fall seen in 1992-93. It is thought unlikely however that the current decline will be as severe as that of the early 1980s. Since the BCC's last forecast in January, its prediction for output in 2009 as a whole has been revised down, from negative growth of 2.2% to a decline of 2.8%. Shallow positive growth of just 0.8% is now expected in 2010.

"Unless the huge falls in UK capital investment are halted and reversed, the UK's productive potential will be seriously weakened," said David Kern, chief economist at the BCC. "Falling investment increases the danger that UK industry will find it difficult to increase output once the recession comes to an end and demand starts recovering."

Annual consumer price inflation (CPI) fell to 3% in January, down from 3.1% in December, according to the Office for National Statistics. It means the figure has fallen for four consecutive months since reaching a peak in September last year, although the latest decline was smaller than analysts had been expecting. Considerable downward pressure had been exerted on the CPI figure by falling transport costs resulting from a drop in the price of fuel, and falling housing and household service costs, including declining rents and lower energy bills. However, this was largely offset by upward effects in areas including recreation and culture and clothing and footwear.

"The smaller than expected fall in inflation postpones but does not remove the risk of deflation later in the year," said David Kern, chief economist at the British Chambers of Commerce. "It is critical that these figures do not deter the Bank of England and MPC from pursuing forceful policies aimed at curbing the seriousness of the recession."

The Financial Services Authority (FSA), has warned the UK's recession may be longer and deeper than expected anticipated. It believes that ongoing issues in the financial sector, in particular the lack of credit available, are jeopardising chances of economic recovery. The FSA stated that risks to the UK economy were weighted to the downside and, while the effects of the fiscal stimulus and monetary easing remained unclear, the recession might be deeper and more prolonged than expected. The comments were contained in the FSA's Financial Risk Outlook which was published yesterday. The report also claimed there was a danger of the economy slipping into a "self-reinforcing deflationary cycle," where a lack of lending forces house prices, consumer spending and business profits down, and unemployment and defaults up. It added that businesses and consumers must plan for a "greater degree of uncertainty than normal".

The UK economy has officially entered recession for the first time in 17 years after figures from the Office for National Statistics revealed gross domestic product fell 1.5% in the fourth quarter of 2008, following a 0.6% drop in the previous quarter. The decline was worse than analysts had predicted and represents the biggest quarterly fall since 1980. All parts of the economy except agriculture contracted in the fourth quarter, with manufacturing the hardest sector hit, recording a 4.6% decline. Overall production fell by 3.9%, while the service industries saw a 1% fall. While accepting that the short term outlook for the economy was dire, David Kern, chief economist at the British Chambers of Commerce, said it was important not to drift into excessive despondency. "The Government and MPC still have important weapons at their disposal, which they will undoubtedly deploy," added Mr Kern. "The huge stimulus package that the new Obama administration plans to introduce could also have beneficial global consequences."