Bleak prediction for the economy
November 02, 2001
THE CONDITION of Britain's economy worsened last month, with house prices slumping and retail sales coming off the boil, figures showed today.
Building society Nationwide said there was a 0.5 per cent fall in house prices in October, and gave a bleak prediction that price growth would continue to slow as job losses and the nervous climate hit consumer confidence.
The figures came alongside a survey from the CBI which showed that the high street sales boom was beginning to fade, with sales volume growth at its slowest this year.
A report on the crisis-ridden manufacturing sector showed that it remained in recession, although the pace of decline slowed slightly.
Chemicals and paints giant ICI did nothing to lift the gloom as it said it would axe 275 jobs in the UK as part of plans to cut 1,300 posts worldwide.
The bleak data followed official figures from the United States yesterday which showed that last quarter the world's largest economy shrank for the first time in eight years.
But economists said that despite the gloom, the UK should still manage to escape a recession.
John Butler, economist at HSBC bank said: "I think there is going to be more bad news ahead - there is going to be more job uncertainty out there.
"The question is not about a slowdown but whether it will turn into a recession. But I'm
still optimistic we will avoid a recession."
There were some words of optimism from the high street and housing markets.
Alex Bannister, Nationwide group economist, said that although the housing market would not be immune to the faltering UK economy, he did not think Britain was heading for a recession.
The society also said home-owners should not panic, and it expected property prices to
continue to rise next year, but at a more sustainable rate.
Yesterday's housing figures are in sharp contrast to those for September, when property prices shot up by 2.8 per cent - the highest monthly increase since June 1993.
The CBI also offered some words of optimism.
Alastair Eperon, chairman of the survey's panel and a Boots director, said: "Consumer spending has moved out of fifth gear but that does not mean it is heading for a standstill.
Today's slowing figures will boost hopes of a cut in interest rates this month.