London-based consultancy Deloitte predicts a downturn in the UK economy due to a slowdown in the housing market.
Faltering property prices, says Deloitte, could lead to a consumer spending decrease and a rise in unemployment.
Contrary to Chancellor Gordon Brown's estimated economic growth of 3% to 3.5%, Deliotte claims it will be nearer 2% this year. By the end of the year the consultancy also envisages interest rates will drop to 4%.
Previous economic growth was achieved through major "imbalances" in the economy, argues Deloitte in its quarterly economic review.
Roger Bootle, Deloitte's chief economic advisor said: "The biggest hit of all is set to come from the housing market which has already embarked on a major slowdown.
"Whereas the main driver of the economy in recent years has been robust household spending growth, this is likely to suffer as the housing market slowdown gathers pace" he continued.
An increase in taxes and stricter household budgets are expected to constrain economic growth in the immediate future, but retail prices are unlikely to be affected due to a swift response from the Bank of England, forecasts Deloitte.
The consultancy predicts "aggressive" interest rate cuts, and a reduction in the cost of borrowing by the end of 2006.
Data sourced from BBC Online; additional content by WARC staff