5
Sep
Pessimism based on wrong analysis, says economist
A former economic advisor to the government has said that the basis
upon which many negative predictions about the economy are based is
unjustified, something which could mean the prospects for the
property market are better than believed in some quarters.
Some analysts have predicted a major recession in the UK and
chancellor Alistair Darling recently stated in an interview with
the Guardian that Britain is facing its biggest economic challenge
in 60 years.
However, this analysis was disputed by Professor David Miles, an
economic advisor to Morgan Stanley, the Daily Telegraph reported
yesterday.
Suggesting that many surveys are overstating the extent of the
economic downturn, he pointed out that interest rates are, unlike
in the early 1990s, set to come down rather than go up - as was the
case then - which means that "negligible rather than sustained
negative growth" is more likely.
The early 1990s saw Britain keeping rates high to maintain the
value of sterling against the German mark in the European Exchange
Rate Mechanism.
Writing in the Independent, analyst Hamish MacRae stated that the
economy will be boosted in coming months by a stronger export
market due to the falling pound and is in a stronger overall state
than in the early 1990s.
