There is now no doubt about it. Even the cheeriest of optimists would have to acknowledge that we are in the grip of a pronounced bear market. The FTSE 100 has slumped by more than 500 points in the past month and from the peak of last October is down by 18 per cent. At one point yesterday it dived to 5,470, close to the nadir of the Bear Stearns panic in March, although it managed a half-hearted rally at the end of the day.

One of the most fabulous bull runs of modern times, a golden period stretching from the start of the second Gulf War in March 2003 to the first shudders of the credit crunch in August 2007, is well and truly history. The slide in share markets since then can no longer be characterised as a blip.

Until share dealers start to believe the economy can pick up again, sentiment is likely to remain sour. And with policymakers seriously boxed in by a nasty bout of inflation and (in the UK's case) a stretched fiscal position, the short-term prospects are not good. If there is light at the end of the tunnel, it is a distant pinprick.

Falling share markets are primarily a symptom, of course: they reflect souring opinions about future company profits. But they also have knock-on effects back in to the economy. Here are ten likely outcomes if, as seems all too possible, share prices fall further or remain becalmed.

1. Companies will start to feel once more the heavy burden of their defined-benefit pension funds. Deficits that narrowed dramatically last year will open up again. Surpluses will shrink back. That can only accelerate once more the speed at which funds are closed to new recruits or watered down.

2. Defined-contribution pension funds are shrinking. The many millions of members of DC schemes are for the first time in years going to see red ink in their annual statements. Those already feeling poorer because of depreciating house prices will feel a little worse because of their contracting retirement pots.

3. Charities and endowments will start to feel the pinch. Their investment assets will shrink and they may also feel obliged to reduce expenditure because of the widespread cuts in dividends by banks - a key source of income in recent years.

4. Stock market-linked savings products are going to be shunned by the general public. Irrational it may be, but recent share-market performance is the key appetite stimulant for Isas and other pooled investment products. Retail fund managers may be in for a grim time.

5. Managements will push to renegotiate remuneration packages. Option schemes will sink so far under water - where market prices are below exercise prices - that directors will argue they no longer provide a carrot. Expect some controversial pushes to rejig them.

6. There will be investor casualties and probably litigation. Split-capital investment trusts and precipice bonds featured in the last bear market. We shall soon learn whether the vast array of structured products promoted to investors in recent years were as bombproof as advertised.

7. There will be much talk of the merits of “bottom-fishing” - especially by investment bankers trying to persuade private equity bidders and sovereign wealth funds to snap up cheaper-looking UK assets.

8. There will be sucker rallies. The bounce in share prices in May proved to be just that as investors took too sunny a view that the credit crunch was easing.

9. If things get really bad, we may have a repeat of early 2003, when insurance companies were obliged by regulators to shore up their solvency positions by selling shares at exactly the wrong moment, exacerbating the price falls.

10. When the turning point finally arrives, many investors will miss it. After two years of utter despondency throughout 1973 and 1974, during which shares lost four fifths of their value, the UK market in January 1975 posted weekly gains of 9.4 per cent, 9.7 per cent, 23.9 per cent and 9.4 per cent. To quote from the market report of Rowe & Pitman, the stockbroker, at the time: “Most investors were wrong-footed by the sudden change and remained imprisoned by the seemingly irrefutable logic of their gloom.”

That's the worst part of bear markets. When they finally end, investors are too shellshocked and leaden-footed to exploit the new conditions.

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