Recession finally ends but what now for 2010?
Official first estimate figures released by the ONS today confirmed what many had predicted, the UK finally pulled out of recession at the end of 2009.
Whilst on the face of it, we can breathe a sigh of relief that the worst post war recession is finally over, the weakness of the GDP figures (0.1%) casts serious doubts over the strength of the recovery.
Most economists had predicted Q4 GDP to come in around 0.4%. The reality is that the UK very narrowly escaped a record 7th quarter of recession.
It has to be borne in mind that this is a first estimate for GDP and that all first estimates have been revised since 2007 so it may very well be that in coming months we will see Q4 GDP revises upwards to nearer 0.3% . That being said the figure has shocked many economists and yet again calls into question the accuracy of many of the economic surveys that have been predicting far stronger recovery.
So what now for 2010? With so much in air at the moment it is going to be very difficult to call. A general election is due within 5 months and whilst the Conservatives still lead in the polls, a clear cut victory is far from secured. A hung parliament remains a more than remote possibility and is probably one of the worst current threats to economic recovery. Tax rises and spending cuts are just over the hill and the removal of monetary stimulus is only a matter of time. Add to that the thorny issue of inflation and the way ahead for 2010 is far too difficult to predict.
So far as the housing and remortgage markets are concerned, much is going to depend on public reaction to the media headlines on our technical exit from recession.
Property is always a confidence game. Following the 1990s property market recovery was subdued for many years because the public lacked the confidence in the market. This time around we have not yet seen the vast wave of repossessions and negative equity issues and therefore the public may feel more confident about the future of the property market
The remortgage market will be dictated by the publics attitude to the imminence and likelihood of interest rate rises. We still consider that BoE rate rises will occur during 2010 but the anaemic GDP figures may have an effect of the public perception of the timing of rate hikes and therefore we may see a continuation of the subdued remortgage market in the first half of 2010.
We welcome comments from others as to their views on the property/remortgage markets as a result of the GDP figures.
Whilst on the face of it, we can breathe a sigh of relief that the worst post war recession is finally over, the weakness of the GDP figures (0.1%) casts serious doubts over the strength of the recovery.
Most economists had predicted Q4 GDP to come in around 0.4%. The reality is that the UK very narrowly escaped a record 7th quarter of recession.
It has to be borne in mind that this is a first estimate for GDP and that all first estimates have been revised since 2007 so it may very well be that in coming months we will see Q4 GDP revises upwards to nearer 0.3% . That being said the figure has shocked many economists and yet again calls into question the accuracy of many of the economic surveys that have been predicting far stronger recovery.
So what now for 2010? With so much in air at the moment it is going to be very difficult to call. A general election is due within 5 months and whilst the Conservatives still lead in the polls, a clear cut victory is far from secured. A hung parliament remains a more than remote possibility and is probably one of the worst current threats to economic recovery. Tax rises and spending cuts are just over the hill and the removal of monetary stimulus is only a matter of time. Add to that the thorny issue of inflation and the way ahead for 2010 is far too difficult to predict.
So far as the housing and remortgage markets are concerned, much is going to depend on public reaction to the media headlines on our technical exit from recession.
Property is always a confidence game. Following the 1990s property market recovery was subdued for many years because the public lacked the confidence in the market. This time around we have not yet seen the vast wave of repossessions and negative equity issues and therefore the public may feel more confident about the future of the property market
The remortgage market will be dictated by the publics attitude to the imminence and likelihood of interest rate rises. We still consider that BoE rate rises will occur during 2010 but the anaemic GDP figures may have an effect of the public perception of the timing of rate hikes and therefore we may see a continuation of the subdued remortgage market in the first half of 2010.
We welcome comments from others as to their views on the property/remortgage markets as a result of the GDP figures.
Labels: conveyancing, GDP, interest rates, property, Recession, remortgages
posted by Murray Fraser at
10:40
2 Comments:
0.1% growth is indeed pathetic, and it's clear that one of the reasons France, Germany, and (even) Italy emerged earlier in Summer '09 from recession was because of export-led growth.
So what exactly does the UK export apart from financial services? Not alot, and I fear that the recession will hit us harder than other comparable European nations for the simple reason that structurally - with our over-reliance on the service sector for the last 20 years - we are not as robust.
By
Stuart P, At
27/1/10 10:27 AM
Stuart - I agree. We have a good exchange rate internationally for exports but for some unknown reason either people don't want our goods or the cost of manufacture is too high to make them competitive
By
Anonymous, At
27/1/10 2:46 PM
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