Finance Matters

Posts Tagged ‘National Institute of Economic and Social Research’

The bank of England is expected to launch another round of quantitative easing (QE) this week, in the hope of preventing the UK falling into another recession, after the economy contracted by 0.2 per cent at the end of last year.

The bank is likely to pump at least £50 billion into the economy by purchasing government gilts from pension funds and insurers with electronically created money.

This round of QE, which is designed to bring down borrowing costs, follows a £75 billion injection into the economy last October.

Since the QE programme started in March 2009, the Bank has bought £275 billion in gilts.

A final decision on the latest round of QE will be made at this week’s Monetary Policy Committee (MPC) meeting.

Some economists believe that last week’s welcome news that the UK’s manufacturing and services sector has grown to its highest level for ten months may lead the MPC to review the scale of the latest round of QE.

Last week The National Institute of Economic and Social Research (Niesr) called for the government to ease back on spending cuts in order to encourage the economy to grow.

The think tank warned that the UK economy will enter recession in the first half of 2012 if households continue to cut back on their spending.

Niesr forecasts that the economy will shrink 0.1% in 2012, however if the eurozone debt crisis is resolved the UK economy could grow 2.3% in 2013, it said.

“We forecast a return to technical recession in the first half of this year, as households continue to retrench, credit conditions remain tight, and businesses are reluctant to invest given uncertainty about both domestic and foreign demand,” the think tank said in its UK and World Economy Forecast.

According to the Land Registry, house prices fell by 0.3% in August after a 1.3% rise in July.

The latest fall takes the average cost of a home to £162,347 in England and Wales.

On an annual basis, meanwhile, the Registry said prices are 2.6% lower.

It must be noted that the Land Registry compiles its data from completed transactions and therefore lags behind other monitors of the housing market but is generally regarded as the most authoritative.

In comparison, the Halifax said house prices fell by 1.2% in August on a monthly basis, while the Nationwide said house prices fell by 0.6% in August.

Meanwhile, according to the Land Registry, the only region in England and Wales to see an increase in its average property value over the last year is London, where house prices are now 2.1% higher than this time last year.

In stark contrast, prices have fallen by 7.8% in the North East of England and by 5.5% in Wales over the same time period.

However, property in London is attractive to buyers from overseas as a result of the cheap pound.

Meanwhile, in terms of future house prices, a recent report from leading think-tank National Institute of Economic and Social Research (NIESR), predicted UK house prices will fall by 4.5% in 2011, followed by an average 1.5% fall in each of the subsequent four years.

According to the think tank, this year’s decline will reflect the squeeze on household finances resulting from higher taxes and rising inflation, and the ongoing lack of mortgage availability.

In related news this week, HM Revenue & Customs (HMRC) revealed a fall in the number of homes sold in August in the UK.

According to HMRC, 78,000 homes worth at least £40,000 or more were sold in the month – 6,000 less than the previous month and 3,000 lower than in August 2010.

However, August is traditionally regarded as a quieter month due to the holiday season.

At the height of the housing boom in July 2007, 151,000 homes were sold.

Today’s figures from the Land Registry, along with other recent reports, suggest the housing market will remain depressed throughout the remainder of the year.

Recovery of the UK economy is to remain sluggish, with GDP slowing to 0.2% in the June to August period, the National Institute of Economic and Social Research (NIESR) predicts. This compares with a 0.6% rate in the three months to July. The influential think tank believes if the weakness continues, the Bank of England [...]

Recovery of the UK economy is to remain sluggish, with GDP growing by 1.4% in 2011 and by 2% in 2012, the National Institute of Economic and Social Research (NIESR) predicts. Growth this year will be constrained by government spending cuts and a squeeze on household finances resulting from higher taxes and rising inflation. According [...]

Influential think tank, the National Institute of Economic and Social Research (NIESR), has today suggested the UK economy recovered in the first quarter of the year after bad weather conditions led to a shock contraction in the final quarter of last year. The economy contracted by 0.5% in the October to December period after the [...]