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This is just a storm before the hurricane
Jonathan Prynn, Consumer Affairs Editor23 Dec 2008
The statistics of this recession - for that is what it is regardless of whether or not the Whitehall wonks have officially declared it - are starting to look truly mind-blowing.
Today's gruesome revised GDP figures have sent City scribblers scurrying back to their forecasts. Many now foresee output shrinking by 2.5 per cent next year, making it the worst single year for the economy since 1947.
For anyone who lived through the darkest days of the Thatcher recession in the early Eighties or the Heath recession in the mid-Seventies that is a startling and scary statistic.
It is difficult to foresee just how severe the impact will be on all our everyday lives. But it will be profound. If the economists are right, this Christmas - for all the drama of the Woolies collapse - is a lull before a storm of historic proportions.
There are more frightening forecasts out today. Deutsche Bank's George Buckley, one of the more respected of the younger generation of City economists, now sees house prices falling by 35 per cent in cash terms and 40 per cent in real terms -after allowing for inflation - before they bottom out at the end of 2010.
That would take property values back to the levels they were at in the spring of 2003. Here comes another jaw dropping statistic. That is only a year after house prices recovered- in real terms - to the level of their previous peak in 1989.
In other words, if the house price collapse is as bad as he predicts, almost 20 years of house price gains will have been virtually wiped out.
If you then think how much the way we think about our wealth has been driven by perceptions of rising prices over that period it gives you a flavour of how profound the coming upheavals are likely to be.
Gordon Brown may be destined to go down in history as the Michael Fish of British politics. The man who told the nation there would be no hurricane - no more boom and bust.
Reader views (6)
I am not so sure Gordon Brown is a Michael Fish, which implies he simply got a forecast wrong. Brown has not only got the forecast wrong, he has misdiagnosed the problem, applied a foolish remedy, refused to listen to alternatives and, worst of all, has convinced himself he is leading the world. The Brown Fish, even when belly up in the water, convinces itself it is swimming on its back. Heaven preserve us, Brown won't.
- James Elliott, Eastbourne UK, 23/12/2008 21:45
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Homeowners? Rare things indeed..Mortgage owners more like..!
- James Morris, Dublin, 23/12/2008 19:13
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I reckon it's time for a real reality check, folks; you know, that which greets most of us in the cold light of dawn. Let's get the ball rolling by calling our millions of "Homeowners", HomeBUYERS.
- Ted, London, 23/12/2008 16:49
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This is just a storm before the hurricane!
No surprise to me!
I read somwhere in the past that Carl Marx,.....Or was it Lennin that said Capitalism would eventually collapse in on itself?.......Or have I got it wrong?
Not being a Marxist or Communist, or whatever else "ist" I would like to know whether this really is the final death throes of Capitalism?
Problem is,I can't see what is going to take it's place!
The Global automobile industry has been over producing for years, and judging by the stockpiles shown in pictures in the media, maybe the "Limit to Growth" scenario has finally arrived? (Including Population Growth)?
One of the problems with the Automobile industry is, cars are/were seen as a Fashion/Status statement, the bigger the car, the bigger the statement!
On a personal note,as far as I am concerned, my M Reg.1600 Rover gets me anywhere, and when that finally gives up the ghost, I'll get another 5 year old car and use that until it gives up the ghost! But, to be honest,I mostly use my 50cc Noddy Bike 99% of the time, no problem parking, no problem traffic jams, 100 odd miles to the gallon,..... the downside?......None unless you consider getting a bit wet when it rains, and I never use it in the snow & ice, common sense really!
I'm afraid that there is going to be a very very painful re-adjustment to Joe Public's expectations in the very near future!
- Geronimo, LONDON MIDDLESEX, 23/12/2008 16:38
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The Nu Labor dream has popped. It is all over Crash Gordon: GO AWAY! They lived on the 10years fat from the previous Major and Thatcher successes.
- Jacqueline, Hampstead, London, 23/12/2008 15:44
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It's worth pointing out that for all the predictions of as bad as 1947 or 1983 or 1992. We will still be paying 2009 level council tax and public sector pensions.
- Sandy, London, 23/12/2008 15:15
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