Recession 'could be over by August' says OECD as housing market perks up

Published 12th May 2009

The recession may be over in Britain by August, international experts said yesterday.

The influential Organisation for Economic Cooperation and Development said output was still shrinking but there were clear signs of recovery.

Its predictions were backed up by a range of figures on the economy.

Surveyors reported signs of strong recovery in the housing market, while retailers said consumer spending picked up last month.

A quick recovery would fly in the face of gloomy forecasts by the International Monetary Fund only a few months ago.

It said Britain was likely to suffer the deepest recession of any leading economy - although it has since said that other countries are likely to fare even worse.


Yesterday the Royal Institution of Chartered Surveyors said there was a big surge in the number of people wanting to buy a home in April - the sixth monthly rise in a row.

The turnaround has been particularly strong in London.

The RICS said house prices are still falling, but the picture is better than it has been since the beginning of last year.

There is still a problem, however, with the reluctance of owners to put their houses up for sale, which the RICS suggested may be linked with a change in the rules governing Home Information Packs.

The upbeat message echoes comments by Lloyds Banking Group at the weekend that it was seeing the biggest number of buying inquiries for more than six years.

Figures on consumer spending show total April sales were 6.3 per cent higher than last year.


The British Retail Consortium said takings were boosted by the timing of the Easter holiday and much sunnier weather than in April 2008.

But Stephen Robertson, head of the BRC, warned: 'With unemployment set to grow through the rest of the year, mounting jobs worries will hold back spending for some time. We shouldn't celebrate yet.'

The OECD report is based on the performance of its index of leading indicators in March. They measure a range of data, including trends in stock markets and business surveys, to pick up signals of how economies will perform over the next six months.

The organisation said Britain, France and Italy were all 'showing tentative signs of a pause in the economic slowdown', while China may have started to recover.

Studies by the Bank of England suggest cuts in interest rates and the policy of pumping cash into the economy have made it easier for companies and individuals to borrow.

But its quarterly Inflation Report tomorrow is expected to say that the economy will shrink this year by more than the 3.5 per cent forecast by Chancellor Alistair Darling in the budget. The Bank is likely to say, however, that once recovery gets under way the economy will grow strongly.

Billionaire investor George Soros, meanwhile, provoked more economic optimism as he made the startling declaration that the global economy was pulling out of recession.

'I expect the recovery to make up for around half of the downturn we have had and then to move into stagnation,' Soros said. 'Asia will be first to find out of the crisis, but America is also currently doing that.'

His words were the most dramatic yet among sages predicting an end of the 18 month global financial crisis. Just months ago, Soros was making big bets that the FTSE-100 index would fall.

He was speaking only hours after one of the City's most respected economists, George Buckley of Deutsche Bank, said the UK recession could end as early as next month.

'National economic stimulus programmes are starting to take effect,' Soros added. 'The downward dynamic is easing.'

Source: ' Daily Mail '

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