"Obviously, at the moment, everyone is waiting to see what happens next in America," he said. "The markets are up and down, there is no clarity and businesses are putting off decisions, particularly involving investments.

"That situation needs to be resolved fairly rapidly, within the next fortnight at least, and then business will have a much better idea of where it is going and what it needs to do.

"But, yes, it does look as though the UK economy is headed for a recession. However, it is expected to be a shallow one, as the UK economy is robust, and Peterborough's economy is especially robust."

His comments come despite a surge in the number of redundancies announced by Peterborough firms over the last few months. These include 450 jobs axed at fridge maker Indesit, 50 staff cut at engineers Baker Perkins, 32 at fine furniture maker Willis and Gambier after it plunged into administration, 180 redundancies at Pearl Insurance, plus a handful at house builders Persimmon and Stamford Homes.

Mr Bridge said Peterborough's already heavy involvment with the environmental sector, which is a strong sector, would help it through tough times – we currently have more than 350 green businesses in the city, with more on the way.

"Peterborough is also very well placed, and has a good transport system," he said. "People might complain that it hasn't, but it really has, and that is appealing to a lot of businesses.

"For example, there are currently plans for Magna Park at Stanground, which will be an inland port, and will create between 4,000 and 5,000 jobs.

"This will see items from Felixstowe Port brought to Peterborough via rail and either distributed throughout the country on the roads, or passed on via the rail network.

"Peterborough is better placed to come out of the current economic crisis than a lot of cities.

"I, personally, think things are going to be tough for quite a while, but we can expect some recovery next year," he said. "Inflation should start to rectify early next year, and, hopefully, the Bank of England will see the case for a reduction in interest rates."

As for the plans to revamp Peterborough, Mr Bridge said he was hopeful things wouldn't be delayed.

"These plans have been put together over the past few years," he said. "And the people putting them together have understood what economic situation they are working in, and made the necessary interventions."

Related:
Credit crunch won't stop £1billion Peterborough masterplan, Jemma Walton, 1 October 2008.