Ok, so lets take this seriously.

baileysbattlebus

IMO, the recession has a way to go yet - the CBI may think we have turned a corner - I think the US are saying the same thing. You can theoretically be coming out of a recession and still have falling house prices and rising unemployemnt. So it could be true.

Or are things getting worse - just more slowly ?

Recoveries are normally investment driven, including household investment, residential construction, spending on home improvements, car purchases and other consumer goods. And obviously business investment.

Can you see anywhere business investment is likely to happen?

Remembering some of AlanM's posts business investment is very thin on the ground. And I'm sure most countries are suffering from the same lack of investment.

So for me, until the banking sector is sorted out and what will be left of it ceases to become something that is bleeding the country dry and is doing "business as usual", we won't see a sustained recovery.

And believe it or not I am not a doom monger, I am usually quite optomistic about everything.

Rochdale_Pioneers

Graham_Devon wrote: »

The BBC are ramp ramp ramp again today. Positioned questions such as "so the CBI says we have reached the bottom of the recession" and "so that means the we are at the bottom of house prices"?

These ARE questions to their presenters, but they quickly get the "well we cant say that, but, ramp ramp ramp".

So the questions themselves are very clever and puts it in peoples minds that the bottom is reached.

So how. Seriously. Would love some of the more optimistic ones to explain how we can defy every other country who is in, or approaching recession, and come out quicker and reach the bottom in the matter of what, 5 months after such a HUGE boom?

Genuine question and I'm looking for genuine answers and would like a polite debate!!!

It looks at the moment like the heavy industrial nations are doing worse than anyone else. Germany, Japan and America top the list for economies in the steepest rate of decline. How we come out quicker is having a leaner economy that unlike Germany isn't almost entirely reliant on the rest of the world not being in recession and having enough cash to buy our products.

For me there are a vew other factors in our favour:
1. Our banks are less exposed than many other countries. The headline exposure figures don't match the reality of how much money we needed to spend, nor the percentage of this to GDP. Compared to Ireland or Iceland or Austria or America we got off relatively lightly.
2. We cut our interest rates sharply and quickly
3. We let our currency devalue to make it competitive. We know how disasterous effect the high Euro is having on countries like Spain
4. We acted quickly with a stimulus package. Contravercial though it was the VAT cut appears to have had a clear impact in reversing the declining fortunes of the retail sector
5. Our housing market is fundamentally healthy. The bubble was demand pull led and that demand is still there albeit suppressed. Compared to Spain or Ireland where the floor has fallen away completely, or Eastern Europe where cheap foreign currency flooding their banks pushing supply through the roof, we're relatively healthy

As I have said all along its not Britain in a snowglobe, you have to look at us in the context of everyone else. How we come out of recession stronger is relative to the competition. Our economy shrinks less than the Germans and we gain ground on them.

Cannon_Fodder

Rochdale_Pioneers wrote: »

5. Our housing market is fundamentally healthy..

Its more like "the demand was led by unsustainable cheap local currency"...?

A lot of demand, everywhere, was fuelled by the desire to make a profit.

Unless BTL is made illegal/expensive/heavily taxed, that profit-seeking will return.

I don't call that healthy.

And as a foundation for an economy, is concerning, to put it mildly.

Rochdale_Pioneers

Cannon_Fodder wrote: »

Its more like "the demand was led by unsustainable cheap local currency"...?

A lot of demand, everywhere, was fuelled by the desire to make a profit.

Unless BTL is made illegal/expensive/heavily taxed, that profit-seeking will return.

I don't call that healthy.

And as a foundation for an economy, is concerning, to put it mildly.

Housing wasn't the foundation for our economy. It was in Spain. It was a major part of Ireland's economy (providing new housing for all the new workers flooding into to man their new businesses). Here it was a sideshow to the city.

You are absolutely right about BTL - city centres have been transformed by large apartment blocks which in places like Sheffield sit half empty. Built to be rented out by BTL investors, that market has collapsed and hopefully will stay that way.

But demand for actual housing is genuine. Go back 5 years and I remember stories from places like Reading where they were struggling to find "essential workers" (nurses, postment etc) as they couldn't afford anywhere to live. Demand massively outstripped supply of family housing and the price skyrocketed accordingly. The stated desire to build more housing wasn't to fuel the bubble, it was because of a shortage of housing. That shortage has got worse as house builders shut down, and the demand whilst suppressed by a lack of mortgage products and fears about price moves is still there. Recession or not people still have babies, get married, get divorced, change jobs and all the other things that make people need to move.

We need to be planning to build a lot of houses. Personally I'd like to have seen the government contract Barratts et al to build homes for councils and housing associations to give people an alternative to buying.