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UK's economic adjustment will be rapid and painful
21/04/2008 09:43:00
The outlook for the UK's housing and retail markets is bleak due to the slowdown of the economy, a panel of financial experts has claimed.
Ernst & Young's Item Club said the effects of the global credit crunch were expected to make conditions for consumers a lot worse as they kicked in harder.
In the body's latest report, during the next two years house prices are expected to fall by ten per cent.
The number of people moving house will fall by 40 per cent despite the recent interest rate cuts made by the Bank of England.
Peter Spencer, chief economic adviser to the Ernst & Young Item Club, said that although the UK economy has remained relatively buoyant during 2008, its dependence upon international markets means "it is only a matter of time before it slows".
"This is going to be a rapid, painful adjustment and it will be a rough ride for a substantial proportion of the population. We are facing a massive sea-change in the balance of economy," he added.
Meanwhile, the credit crunch should not affect consumers if they are careful with their money, financial advisory service Moneyfacts has claimed.
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