Showing posts with label UK recession. Show all posts
Showing posts with label UK recession. Show all posts

UK Recession Over

Hurrah! Get the bunting out & order the cakes in from Sayers, I've got some jelly in the cupboard and there's some chocolate fingers left over from Christmas. News just out confirms that the UK is officially out of the longest recession in UK history after the economy grew by a whopping 0.1% in Q4 2009.

Before we get too carried away and order some Marks & Spencer vol au vents to go with that, analysts had been expecting growth of 0.4%, so we're out of recession in a disappointing manner. The last major economy to drag itself out of the mire, gasping for breath at the side of the pool. Alistair Darling has managed to burst us out of the paper bag that was the recession with one lucky punch. We kind of tripped over the bottom step and fell out of the recession into a heap on the floor. Covered in vomit with a kebab stuck to the side of our head. And when we get home, from the recession, we'll find that we've lost our keys and will have to shin up the drainpipe of economic growth to get in. Except that it's been raining, and the drainpipe of economic growth is all slippy, but we're so happy that the recession is over that we'll sing a little song....by the Beatles...."Oh Darlin..."

UK: More Proof Recession Is Here

John Lewis today reported a 9.7% drop in weekly department store sales, with most of its stores suffering double-digit falls.

Despite Christmas on the horizon this is the eighth weekly decline in a row.

Sales were down at all John Lewis department stores across the country with the exception of Cambridge.

Peterborough and Cribbs Causeway near Bristol saw the biggest slump with sales down by over 20% in the week to last Saturday. Even the group's flagship store in Oxford Street reported a 9.1% sales drop.

The worst performance came from the group's home departments which suffered a 14.8% fall in sales. Electricals posted an 8.5% drop and fashion sales were down 6% on a year ago.

Meanwhile, shares in DSG International, owner of PC World and Currys, fell by over 30 percent on Thursday after credit insurer Atradius reduced its cover against the retailer being unable to pay its suppliers.

In other gloomy news Rightmove, the online estate agent has warned that house prices across the UK have fallen further than official data and market indicators suggest. Miles Shipside, the company's commercial director, said that estate agents had revealed that the actual prices being achieved for properties had fallen by around 20 to 25 percent beneath peak asking prices, a disclosure that had not been referred to in national indices. The latest trading statement issued by Rightmove also revealed that the downturn had forced 250 to 300 estate agents to leave the market each month between August and October.

Britain's housing bust is bringing down the economy

(IHT) -- LEEDS, England: Down the road from the train station here is a gaping hole. At the height of the property boom, a developer started to build what was to become one of the tallest and most stylish apartment blocks, designed by Philippe Starck.

But construction stopped abruptly last month when financing dried up because of the credit crunch. Now the abandoned site stands as a stark symbol of the collapse of Britain's building boom and how the credit market turmoil in the United States has seeped across the Atlantic. It also suggests what lies ahead for a few other European economies where property booms gave now debt-ridden consumers a false sense of wealth and security.

In recent weeks, Britons have come to an uncomfortable realization: After 17 years of uninterrupted growth, their economy is moving closer to recession and may well already be in one. Home prices are dropping, sapping consumer confidence, and even though repossessions, bankruptcies and unemployment are still at relative lows, they have started to creep up during the last three months.

Just Thursday, figures released by HBOS, the largest mortgage lender in Britain, showed the housing market slump was gathering pace. The average price of a property fell 8.8 percent in the 12 months through July, the biggest drop since the company started to track prices in 1983.

But the Bank of England is caught in a bind. It is unable to lower interest rates to keep the economy growing because, at the same time, inflation looms. It left lending rates unchanged at its meeting on Thursday.

As a result, many economists are predicting that the situation will sharply deteriorate over the next six months, leaving Britain to face a longer, more painful downturn than the United States.

"The U.S. has seen problems come through earlier and there was more action to lower interest rates than in the U.K., meaning the U.K. will be somewhat slower to recover," said Ian Harnett, managing director at Absolute Strategy Research in London.

Voters are blaming Prime Minister Gordon Brown for the economy's ills, giving his Labour Party its worst popularity rating since the early 1980s.

Britain's economy is in worse shape than most in Europe, with the exception of Spain and Ireland, because of its heavy reliance on two industries that currently struggle the most: housing and financial services.

At the height of the housing boom British banks were trying to outdo one another in their willingness to lend while rivals on the Continent were generally more constrained by regulation.

Leeds is among the cities hardest hit. Situated in the middle of the country, near Manchester and Liverpool, with a population of almost 450,000, it boomed in the late 1990s when technology and service companies set up shop here to profit from cheaper rents and proximity to a major university.

Demand for offices and apartments gave way to a construction boom that made Leeds Britain's fastest growing city in 2003 and christened the region the "Golden Triangle."

Now, many of Leeds's office buildings stand empty and their once trendy glass facades are cluttered with "For Sale" signs.

New developments, like the Lumiere project next to the train station, are being canceled as banks withdraw their financing. Another development, the "Kissing Towers," which would have provided 300 new apartments, was shelved last month.

North of the city center the picture is even bleaker. Overflowing garbage containers stand in front of boarded-up houses, and the city's charities are bracing for a busy autumn and winter.

Gordon Bell, chief executive of the Consumer Credit Counseling Service in Leeds, said calls to his team were already up 20 percent in the past three months and would likely rise further since personal bankruptcies were expected to increase next quarter.

Shahz Khuram, a 33-year-old taxi driver is increasingly nervous about his $160,000 mortgage on his two-bedroom apartment. The fixed-rate period ends next year and he will have to refinance.

"It's not only the mortgage rates that have gone up," he said. "Everything is more expensive. I have friends who are selling their cars to pay their mortgage."

He added, "I'm really working hard now to save some money but it's hard especially with the higher petrol prices."

The average interest payment for a mortgage in Britain rose to 5.8 percent from 5.6 percent in the 12 months through May. That seems low, but home prices dropped 4.4 percent in the same period, according to mortgage lender Nationwide

Repossessions are creeping up, and even property prices in London have started to fall, with values of homes in the most expensive neighborhoods, including Knightsbridge, down by 1.6 percent in July.

Property prices remain about 10 percent higher than three years ago but Standard & Poor's warned last month that prices could fall an additional 17 percent before the end of next year. That would leave about 1.7 million homeowners under water, holding mortgages exceeding the value of their properties.

Nationwide warns of recession as house price drop doubles

Times Online -- Nationwide, the UK's biggest building society, today gave warning that a recession could be on the way after the average house price in the year to July plunged to a three-year low of £169,316. The average price of a home is now £15,000 lower than in July last year.

Nationwide said that over the course of this year, house prices have fallen nine months in a row, and in July declined by 1.7 per cent, more than double June’s 0.8 per cent fall.

Yesterday, it emerged that 1.7 million homeowners in the UK face falling into negative equity if house prices plunge by an expected 17 per cent.

Standard & Poor's (S&P), the credit rating agency, said that 70,000 homeowners already have mortgage debt higher than the value of their homes.

However, S&P expects the price of an average house to fall by a further 17 per cent into next year, plunging one in six homeowners into negative equity.

Citi downgrades Lloyds TSB, sees UK recession

LONDON (MarketWatch) -- Citigroup downgraded British bank Lloyds TSB to hold from buy as it expects the U.K. to fall into a recession in the second half of 2008. It cut earnings estimates by at least 40% on Royal Bank of Scotland, Alliance & Leicester, HBOS and Barclays and retained sell ratings on HBOS and Barclays.

Britain already in recession, expert warns

I wouldn't have thought that you needed to be an expert to suss that one out. What will they give us next? Noah hears rain forecast, opens account with Jewsons?

(Telegraph) -- Britain is already in recession, one of the City's leading experts has warned.

The economy started shrinking last month and will continue to contract until Spring 2009, according to Lehman Brothers, one of the world's major investment banks.

The warning comes amid growing fears that the UK is facing its first major slump since the early 1990s, and follows a series of warnings from businesses and consumers.

However, while most experts are predicting only a slowdown in growth later this year, Michael Hume of Lehman Bros said that a recession - defined as two or more quarters of successive economic contraction - was already underway.

"We think the economy will contract in the third and fourth quarters, and then in the first three months of next year," he said.

"It would be quite surprising if the recession didn't actually start in June."

However, in more welcome news for struggling households, he predicted that as a result of the slump the Bank of England will be forced to cut interest rates to 3.5 per cent or lower, with the first cut coming amid the worsening barrage of economic news in November.

A number of economic forecasters have warned that recession is a significant possibility, including Capital Economics and the British Chambers of Commerce.

House prices are already falling at the fastest rate since the early 1990s property crash, according to figures from Nationwide building society, while official statistics showed recently that families' disposable incomes shrank in the first three months of the year.

With families squeezed by higher taxes, rising interest rates and a slowdown in salary growth, they have resorted to dipping into their savings in order to stay afloat, according to official figures which show the savings ratio has slumped to a near 50-year low.

Mr Hume said families would have to adjust to a fall in their standard of living as a result.

"There is nothing quite comparable to what we're going through at the moment," he said.

"There are some parallels with the 1990s, with house prices falling and so on. But on top of that you've also got this horrible commodity price shock which is eroding wages, and you didn't have that in the 1990s.

"This is neither the 1930s nor the 1970s but it has certain elements of both."