United Kingdom economic recovery of the recent emergence of some signs that many people judge United Kingdom economic downturn worst period may have in the past, during the second half of the year is expected to usher in growth momentum. However, Barclays Capital United Kingdom Chief Economist Simon · Hayes (SimonHayes) interview, said that the United Kingdom tighter credit market and bad financial situation decides United Kingdom economic recovery trend is "wide u-shaped", the economy will be a long time to run in the bottom, the recovery will be a lengthy process.
Office: When can the United Kingdom economy for further growth?
Hays: due to United Kingdom credit markets and public finances are difficult in the short term to fundamental improvements, so now on optimistic economic recovery is still too early, the United Kingdom economy will experience a longer period of sluggish growth.
We forecast that this year's third quarter United Kingdom economic growth rate is zero, only the fourth quarter is expected to grow. To this end, this year, the United Kingdom economy will shrink 4.2% next year and the year after the economy is expected to have gained many United Kingdom 1.3% and increased speed 2.2%, lower than the United Kingdom economy 2.5% of the long-term average growth targets.
According to official data of the United Kingdom, the United Kingdom in the first quarter GDP cycles than atrophy 2.4% is 50 years since the greatest quarterly decline, but the second quarter decrease to link 0.8%. Our forecast for the second half of this year, the United Kingdom's economy is expected to return to growth.
Office: United Kingdom economic slow growth process, which will become the main stumbling block to recovery?
Hays: there are two major factors, first of all is that credit conditions. Our mortgage loan conditions compared to a few months ago the worst period has improved, but still very weak. Our forecast, United Kingdom price from peak to trough declines are expected to reach 30-35%. But in recent months, we see that the United Kingdom real estate market has significantly improved, the slowdown in house price declines, but mortgage home loans or at a lower level.
The second factor is the bad government's financial position. In the past couple of years, we see that the Government's public finances are deteriorating significantly. In March of 2008 budget reports, the United Kingdom Government had forecast, the Government debt to GDP ratio of up to 40%. However after only one year, in April 2009 published financial reports, the United Kingdom Government forecast, this proportion rises to 80%.
According to the Government's current plans, the debt situation in the next five years could be stabilized. If you want to reduce public sector debt, the Government must adopt a tightening of fiscal policy. However, the United Kingdom in respect of the current economic situation, government spending on the economy also play an important supporting role, so at least the next two years, the Government debt in the proportion of GDP will continue to maintain a high level.
Office of: United Kingdom Central Bank "quantitative easing" monetary policy for the United Kingdom economy has played a kind of stimulus? Central Bank will when to call a halt to this policy?
Hayes: the United Kingdom's Central Bank decided to take the "quantitative easing" monetary policy because at that time, the United Kingdom's economy is so bad, the Confederation, the Central Bank concerned United Kingdom may encounter screw type stagflation, this will be a very big risk. In this year's 3-5-month period, stagflation has become a major concern of the Central Bank, which is why the Bank's bonds purchase program from the original 750 million expansion to 1250 million pounds, and then expand to 1750 million pounds.
However, as the United Kingdom economy has some positive signs that this concern should be said that has not previously been so serious, since start United Kingdom economy has stabilized. Central Bank again and again to expand the scale of the "quantitative easing" is an attempt to offset the stagflation risk, but now it has receded.
However, an accurate assessment of the "quantitative easing" policy on the economic impact is very difficult. We do not know how the policies work, because the previous United Kingdom's Central Bank has not implemented a similar monetary policy. Therefore, we need some time to observe and evaluate this policy's role.
However it is important that the United Kingdom Government and the United Kingdom's Central Bank through various media tell people: "we see the severity of the situation, so we printed notes, to do something to a powerful solution to the dilemma." In fact, the United Kingdom authorities of this policy on enhancing public trust and expectations have play a role in the implementation of the policy is important.
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