When Britain Will Start Booming Again? By Morgan Capital & Research
According to Morgan Capital & Research,the Britishs Real Estate and Retail Sector are set to recover again
. The leading economic research company cite that the 2012 Olympic will help London to boost its consumption and real estate demand.
Morgan Capital & Research,expects the returns on heavy investments for the 2012 Olympic infrastructure to fully manifest itself by 2013 and 2014, its research analysts are expecting the Britishs tourism to soar by over 60 per cent over the next decade, with the number of jobs in the industry rising by over 200,000. House prices may rise from 15%-30% over the next five years depending on the location of the houses. Some location may rise by 40%.
Rents in the Square Mile are forecast to rise to 56 pounds per square foot in 2010 from 47.50 pounds in 2009 and to as much as 98 pounds per square foot in the West End in 2011 compared with 88 pounds last year, Savills said. Vacancy rates have already declined across the entire City office market from 15.6 percent to 14.2 percent following around 4.5 million square feet in take up during 2009 and will continue to fall through 2010, the report added.
The research company is expecting a miracle from the pound very soon, in its economic report, Morgan Capital & Research states that the pound will be forced to rebound when visitors change their currencies into pound for the 2012 Olympics and when the demand for London real estate hits peak. There may be a sudden demand for the pound if the British show significant improvement on its economic data due to the Olympics spending stimulation.
Six reasons why Britain is booming again
by The Investor on February 1, 2010
I continue to think the UK economy will surprise to the upside in 2010, as city boys and rappers like to say.
Todays booming manufacturing PMI figure will be shocking if youve read too many gloomy pundits still partying like its 2008.
Yet this jump from one superficially meaningless number to another (to 56.7, for the record) represents:
Manufacturing activity expanding at its fastest rate for 15 years
New orders rising at their quickest pace for six years
Output growth back at mid-2006 levels
And this recovery has been going on for months!
Six reasons why UK PLC is growing again
True, the economy is partly rising like a zombie climbs out of a grave. GDP fell for six quarters the worst run on record. The only way was up.
Yet I think the recovery will prove both real and strong, helped by the following factors:
1. Sterling is low
A weak currency is a boon, provided you dont need to spend your money overseas. It makes the stuff we export cheaper, and it makes overseas earnings more valuable. (Remember, 70% of FTSE 100 earnings comes from overseas). The last time the pound was this low was in the mid-1990s, and that started a boom, too.
2. Unemployment is already falling
UK unemployment stands at 2.46 million far below the 3 million peak predicted. Moreover, 7,000 fewer are unemployed compared to the previous figure. Yes, a lot of people are watching Loose Women whod rather be working, but unemployment is a lagging indicator. Its not meant to start falling until the economy has recovered. (So perhaps it already has?)
3. Interest rates are crazy low
Mervyn King will have to write a letter soon when inflation heads above 3% yet the central bank rate is just 0.5%. Partly rates are low because inflation is thought to be a blip (well see!) but theyre also low to support the banks. Low interest rates nearly always boost economic activity, and the affect is lagging, too.
4. QE has done *something*
Theres a lot of debate about quantitative easing, mainly because we know as much about it as a ten-year old boy knows about a clitoris. But its had an affect almost to the day it was announced, panic was averted and asset prices began to rise. Its yet another lagging stimulus.
5. The financial sector is booming
We heard a lot about how the UK would fall harder because of our massive financial sector, and we did until banks began bathing in the honeyed waters of cheap Government money. Now bankers are getting bonuses and the curse has turned into a blessing.
6. Growth will likely be revised upwards
UK GDP only grew by 0.1% last quarter. Some boom, eh? Well, scary as it is to agree with Dark Lord Peter Mandelson, I think hes right that GDP will eventually be revised up. Not next month in several years time. The same thing happened in the last UK recession, perhaps because of our big services sector.
Remember, well pay later
Im not claiming the UK hasnt been through the wringer, nor that weve finished paying for the boom that preceded the credit crisis.
Weve borrowed from our future selves to get going again. Weve done it directly via Government debt and ongoing deficits which well pay for in higher taxes and by taking on the broken banks Northern Rock, RBS and Lloyds (the last of which well probably sell for a profit).
Weve also probably stoked up future inflation. The weak pound will mean more inflation when consumers start spending again, and reality will eventually hit the over-valued UK gilt market. Both factors will push UK interest rates back to their higher natural levels.
Growing public and private debt will constrain consumption and tame future expansion. Were richer now than we expected to be 12 months ago, but well be poorer in five years than you might imagine.
by: sackjames54
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