Auto Sales Dive As Stimulus Ends

Posted on | September 28, 2010 | No Comments

Car sales nose-dived in August in much of the developed world as government scrappage schemes came to an end.

The LA Times reported that according to AutoData Corporation, US auto sales had the worst August in 27 years, plunging Read more

JP-Morgan Global PMI Signals World Economic Growth Cooling Rapidly in Second Half of 2010

Posted on | September 22, 2010 | No Comments

In August, the JP-Morgan Global Purchasing Managers’ Index (PMI) compiled by Markit continued its fall from the peak established in April this year. At it’s current level, the index is signalling that annual global GDP growth will slow down from 3.5% in Q2 to around 2.5% in Q3, with manufacturing growth slowing to a 13 month low and services growth slowing to a 6 month low.

In the developed world, the Euro countries are expected to maintain growth of around 0.7% for Q3, while the US and the UK are likely to post only 0.5% GDP growth in Q3, sharply down compared to Q2.  Japan continues to struggle in Q3, with no growth in GDP expected. Overall the developed world’s GDP is expected to slip from an optimistic 2.4% in Q2 to a depressing 1% in Q3.

In sharp contrast, Read more

Conditions Ripening For a 20% Fall In UK House Prices

Posted on | September 20, 2010 | No Comments

Most “experts” agree that house prices are set to fall in the near term but there is little consensus about the timing, extent and duration of the slide in property prices.

Forward looking economic indicators suggest that the head winds facing the UK and global economies could result in a double dip recession. If this happens, UK house prices have the potential to fall by at least 20% over the next couple of years.

The process has already Read more

Looming Second Credit Crunch May Tip Economy Into Recession

Posted on | September 18, 2010 | No Comments

Having survived the 2007/2008 financial crisis by the skin of their teeth, UK banks, along with many of their counterparts around the world, will be facing significant challenges in the next few years.

According to the Bank of England’s Financial Stability Report  (June 2010), UK banks will need to refinance £750 – £800 billion of roll over debt and liquid assets by the end of 2012.

This means that on average, UK banks need to raise around £25 billion a month in the debt markets for the next two and a half years. This is double the average of £12 billion a month of public debt issued by banks to June this year and well above the average of £15 billion a month raised between 2001 and 2007.

Banks around the world are in much the same position. They are estimated to need about Read more

UK Unemployment Set to Rise Above 3 Million

Posted on | September 15, 2010 | No Comments

The massive public spending cuts and the deteriorating outlook for the UK economy is likely to cause unemployment to rise above 3 million over the next few years.

The Office of Budget responsibility estimates that 600,000 public sector jobs will be lost over the next 6 years and The Chartered institute of Personnel & Development (CIPD) estimates that 725,000 public sector jobs will be lost over the next 5 years, all due to the spending cuts. The CIPD believe that unemployment will reach almost 3 million in 2012 and remain at that level for about 3 years.

It will get even worse as the parts of the private sector Read more

UK House Prices: Unemployment & Interest Rate Rises Will Deepen Housing Market Downturn

Posted on | September 14, 2010 | No Comments

It is widely accepted that the massive public spending cuts that are required over the next few years to balance the UK’s budget will result in public sector job losses from 2011 onwards. In addition, the spending cuts will reduce government spending on private sector contracts and thus affect private sector jobs as well.

Given the sputtering economy, the likelihood of the private sector creating enough jobs to absorb all these job losses is debatable. On balance it looks like the economy will slow down or even contract and unemployment will begin to rise. This is likely to lead to repossessions and is generally bad news for the housing market. Read more

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