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munimula

Hpc On Schedule

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Resident MoneyWeek economist James Ferguson sums up what we can expect in 2006;

We started the year saying house prices would come off in some style. Well, that hasn't happened yet, but only a brave man would say it won't, given the collapse in growth. However, to some extent the damage is already done as the sharp fall in MEW has hit consumptions hard. In turn, Gordon Brown's economic growth forecasts are in tatters. Some commentators were hoping that by now the BoE would have cut rates aggresively to get demand back on track. However, as we have long argued, rate cuts are often tricky at this stage of the cycle, thanks to inflationary pressures. This time, these worries have been exacerbated by the rise in the oil price. Ahead of the October meeting at the MPC, analysts were united in expecting a rate cut at the Nov meeting. Since then, the consensus has moved and now 20% of analysts surveyed by Reuters said the next move in rates would be up.

I see little at the moment to change the trends we've already seen established. The economy will disappoint, inflation will remain stubborn and base rates will very possibly have to start rising again until the currency is firm enough to keep inflation at bay. But I expect sterling will weaken further and any increases in unemployment will only deepen the gloom for the stretched homeowners, whose mortgage rates may go up a the worst possible time. I'm glad I'm not Gordon Brown.

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We're about to see unemployment shoot up, accompanied by government borrowing, and with that either an increase in rates or a fall in the Pound.

Fairly close to the picture that has unfolded during past economic cycles.

Next year is going to be a hell of a ride.

Edited by BandWagon

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We're about to see unemployment shoot up, accompanied by government borrowing, and with that either an increase in rates or a fall in the Pound.

Fairly close to the picture that has unfolded during past economic cycles.

Next year is going to be a hell of a ride.

It's strange to see that so many talk about having avoided a crash when a crash now looks even more likely. In previous cycles a slowdown in the property market lead to slower growth and then recession. It doesn't look any different now, it all seems to be playing out. An economy is going to miss MEW when it was running at 9% of gdp!

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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