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Poor Outlook For Consumer Spending & House Prices

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http://www.newratings.com/analyst_news/article_1301000.html

Tuesday, June 20, 2006 9:10:28 AM ET

ING Financial Markets

LONDON, June 20 (newratings.com) - Analysts at ING Financial Markets say that the outlook for consumer spending in the UK remains poor.

In a research note published this morning, the analysts mention that a paper recently released by the Bank of England (BoE) casts doubts on the high correlation between housing and consumer spending. The analysts say, however, that the relationship between real consumption, real house prices and real household disposable income has been strong over the last 40 years. Lead indicators, such as mortgage approvals, indicate a softening of the housing market in the forthcoming months and this is likely to adversely impact consumer spending, ING Financial Markets adds. Equity market volatility and the ongoing adverse effects of higher taxes, utility bills and unemployment are expected to exert pressure on household purchasing power, leading to further weakness in consumer spending, according to the analysts. The BoE is likely to announce a 25bps rate hike in 2H06, and there is downside to rates in 2007, ING Financial Markets says.

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http://www.newratings.com/analyst_news/article_1301000.html

Tuesday, June 20, 2006 9:10:28 AM ET

ING Financial Markets

LONDON, June 20 (newratings.com) - Analysts at ING Financial Markets say that the outlook for consumer spending in the UK remains poor.

....The BoE is likely to announce a 25bps rate hike in 2H06, and there is downside to rates in 2007, ING Financial Markets says.

Despite Mervyn Kings protestations, it does seem that the BoE's primary target is not inflation but consumer spending :angry:

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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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