Monday, Apr 21, 2008
More pain to come
Guardian: Forecasting group warns of pain for UK economy
The British economy is facing two years of sluggish growth in the wake of the global credit crunch unless the government takes decisive action, according to the Ernst & Young Item Club. The economic forecasting group describes the outlook for the housing market and the high street as "bleak" and about to get "a whole lot worse", Although the economy has remained relatively buoyant so far this year, our reliance upon international banking markets means it is only a matter of time before it slows, This is going to be a rapid, painful adjustment and it will mean a rough ride for a substantial proportion of the population.
Posted by who stole my pension? @ 05:56 AM (817 views) Add Comment
14 Comments
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1. harold said...
"...unless the government takes decisive action"
Slash rates... bleat bleat... more bailouts... bleat bleat... spray money...
2. hpwatcher said...
What about the UK subprime that will be created, due to falls in house prices?
3. bystander said...
"The British economy is facing two years of sluggish growth"
...all you need to know is in the first line, 'sluggish growth', the word growth is a positive and it will only be sluggish when compared to thye debt fuelled binge of the last decade. Reality is needed to lower expectations and ensure that all service providers, be they banks, retailers, estate agents, etc. become more realistic with business models, predictions and pricing. Business and life is cyclical, and has been said many times on this site and now in the mainstream media, the current trends, which have become entrenched in the consumer and more importantly the business mentality, are not , and have never been sustainable. The old adage, "live for the day, but plan for the future", should become the mantra of all.
4. seanb303 said...
anybody watch the andrew marr show yesterday?
alistair darling mentioned inflation saying the cpi is an internationally recognised system
and not fiddled in any way
5. stu_b said...
@hpwatcher,
I don't think falling house prices can create sub-prime can they? Surely they're sub-prime because they can't afford the levels of mortgage debt they've taken on? The issue of falling prices however must impact on LTV accross the piece including sub-prime borrowers. I think not enough is made of the increases in the cost of living due to inflation in food and energy...this drains discretionary spending from the economy.
So lower house prices reduces consumer sentiment - lowers spending, and inflation removes spending power - lowers spending. Surely if the government tackles one issue - house prices - then they exacerbate the other? This dynamic seems to me to work both ways; the government is bolloxed basically!!
@seanb303,
CPI is a joke and a fraud on this country - they will probably revert to RPI when YoY house prices are -ve.
6. hpwatcher said...
''...anybody watch the andrew marr show yesterday?
alistair darling mentioned inflation saying the cpi is an internationally recognised system
and not fiddled in any way...''
Well he would say that wouldn't he?
The whole economic policy of this Government is based on the lie that inflation is low. Clearly it isn't, just go to any supermarket.
7. cornishman said...
I've been listening to the Today programme this morning and am getting so bloody angry. Now it seems that anyone who took out a mortgage, and who knew full well what the state system was for paying mortgage interest after 39 weeks of unemployment, but who didn't want, or couldn't be bothered, or couldn't afford to take out an insurance in case they lost their jobs - they want the taxpayer to bail them out!
The banks want the tax-payer to bail them out
GB wants the tax-payer to bail him out
What about the poor bloody tax-payer who exercised moderation and made prudent financils decisions?
I thought that would make me feel better - but it hasn't - I'm even more bloody wound up now!
8. seanb303 said...
you should have seen him , he went on about high food and fuel inflation and then said the cpi is correct
what an idi*t
9. hpwatcher said...
I don't think falling house prices can create sub-prime can they?
I was thinking about the fact that the people in this country won't be as wealthy as they thought they were; but they will still have the same debts. For those that don't lose their homes they will need to very severely cut back.
Moreover, a UK credit crunch could be far worse than the one in America, due to the greater debt and house price rises in the UK.
10. Ijjhall said...
@cornishman re taxpayers paying mortgage interest to halt repossessions..
I wouldn't worry too much. They can plead and plead and plead (and they are only going to get louder) but have you seen the size of the current bloated welfare bill even after a so called boom period ? It is frightenly high in sick note Britain. The idea that in the deep downturn ahead the country can in addition to paying out excesses in u/e benefit can also afford to prop up distressed homeowners in a associated full scale housing slump is nonsensical. The surplus has long gone, we have the worst balance of trades deficit in the developed world. We have no money left - eventually even New Labour Ministers have to live in the real world.
11. Young_mark said...
Dear Stu,
Gordon Brown changed the inflation measure used for inflation targeting purposes (IT) from RPIX to CPI. RPIX is the Retail Price Index eXcluding housing costs i.e. mortgage interest payments. RPIX had been used by the Tories and was inherited by Gordon Brown. So the change to CPI was not made to exclude housing costs.
The Retail Price Index does include housing costs. It was used very briefly by the Tories for IT purposes following the expulsion from the ERM in 1992. They replaced it with a combination of RPIX and RPIY (RPI excluding indirect taxes). Finally, RPI which goes all the way back to 1947 has never included house prices.
Dear hpwatcher,
Just how do you calculate inflation by going down the supermarket? Do you make a mental note of the basket of 640 goods and services used by the ONS before you set off? Do you collect 120,000 prices as you wander round the supermarket (the ONS does)? Do you know the prices of these goods and services 12 months ago? Do you know the weighting of all 640 items? No, really? In other words, you just guess!
12. cornishman said...
Young_mark, do you work for the government/GB? I'm dying to know!
13. Shipbuilder said...
Young_mark, ignoring what the basket of goods and services is or isn't - do you, personally, believe the CPI inflation figure? Have your major monthly expenses, such as fuel and food only gone up by 2%? Why do you think it is so out of kilter with what the average man in the street believes?
14. p. doff said...
I don't know about anybody else, but I have certainly not checked 120,000 prices as I wander round the supermarket, nor have I compared the price of individual items with last years prices. What I do know however is how much my average weekly supermarket bill is, and I know from my bank statements how much less I paid last year. I also know that my wife and I don't eat any more than we used to.
That said, I mostly buy food (and also petrol) at the supermarket, but on a recent occasion when I bought a telly, I was very suprised how cheap it was (compared to a similar item on sale last year). The telly I was replacing was over 20 years old though. I hope the new one lasts as long as it does appear a wee bit insubstantial.
Oh, I wouldn't set too much store by the Office of Notional Statistics. We had a home visit from somebody armed with a laptop collecting data for them. Any questions that I wasn't sure of the correct answer were simply fudged by the person keying in the info' so that they could move onto the next question.