Sifting through the data – a tale of mixed messages
Tony Ward is chief executive of Home Funding
There seems to be a fair amount of confusion out there at the moment with regard to how the UK economic recovery is going.
We have Sir Mervyn King, governor of the Bank of England, saying that the UK economy is recovering at a ‘slow uncertain pace’ and it was ‘not clear if positive indicators would persist’ whilst Charlie Bean, deputy governor of the Bank of England, seems much more optimistic suggesting that there were ‘reasons for optimism’ for the UK economy with real ‘signs of progress’.
Conversely mortgage lending seems to be picking up, with the Bank of England suggesting that mortgage approvals are gathering in pace, thanks in some part to the Funding for Lending Scheme. Yet house prices remain subdued with the Nationwide Building Society predicting that the housing market will take some time to gain any sort of momentum.
It’s all very confusing and it seems daily we are getting a mixed bag of messages.
For what it’s worth I think that things will gradually start to improve in the UK economy next year and we will see more consistent data coming through.
I also agree with John Cridland at the CBI who suggests that we need to get used to a ‘new normal’ of slower growth with annual expansion of 2% looking pretty good.
As for the housing market, I think that too will perk up albeit gradually. However I am concerned about the longevity (or lack of it) of the Funding for Lending Scheme.
I think thus far, that it is has been a force for good encouraging banks and building societies to lend and probably assisted financial institutions to price more competitively. But what happens when the Scheme ends, currently pencilled in for 31 January 2014?
Food for thought.