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MIp29_0110:MI 12 Jan 15/12/2009 14:20 Page 21
Economic view | 29
Time to eat
ground glass
Mark Stephens, deputy chief executive of
Aldermore, considers the different views
regarding 2010
s the year comes to an end some of Nonetheless, as 2009 draws to a close UK GDP So what does this mean for the
us feel compelled to engage in that growth for the year is forecast to be –4.5 per intermediary market?
time honoured tradition of staring cent, rising to 1.1 per cent in 2010, 2 per cent in Life is going to remain challenging, because
into a crystal ball to see what 2010 is 2011 and 2.3 per cent in 2012 (according to there is nothing to suggest that a sudden recov-
likely to hold in store. HM Treasury’s compilation of forecasts by 21 ery in either the residential or commercial
But, as the American economist Edgar R leading economists). Although the Bank of mortgage markets is going to occur. In fact, the
Fiedler once said: “He who lives by the crystal England anticipates inflation being volatile in latest forecast from the Council of Mortgage
ball soon learns to eat ground glass,” which is the short term, it expects it to be at or around Lenders says that the number of residential
why, as a general rule, I try to avoid making the target figure of 2 per cent over the course of property transactions will only be marginally
forecasts. I much prefer to look at what the the next couple of years. Unemployment, higher in 2010 at 0.85 million (0.81 million in
economists are telling us and then make a which currently stands at 2.46 million, is 2009) and that gross advances will rise from
judgement call as to whether their views sound expected to peak at 3 million during the first £141 billion to £150 billion.
plausible. half of 2010. The commercial property market is far
However, having reviewed the 2010 forecasts harder to call because it is more diverse in
from many of the leading economists, I’m Divergence of opinion nature. The key to success will lie in brokers’
inclined to agree with another of Fielder’s The biggest divergence of opinion appears to ability to be able to identify those sectors which
observations that: “The herd instinct amongst be about what’s going to happen to Bank Base show the earliest signs of recovery and, in my
forecasters makes sheep look like independent Rate. Although a few forecasters believe that experience, it is often small and medium sized
thinkers,” and there certainly appears to be an BBR will remain at 0.5 per cent for the year businesses which are best able to be fleet of
uncanny similarity of views about the year ahead, a far larger number are expecting it to foot and take advantage of new opportunities.
ahead! rise to somewhere between 1 per cent and 2 per When the credit crisis hit many lenders had
cent. Another area of uncertainty concerns gov- no option but to shut their doors to new busi-
Consensus ernment policy post the election (whichever ness, but we are now starting to see financial
The consensus view amongst economists government that happens to be). Clearly, the institutions returning to the market, as
seems to be that the UK will follow both current government isn’t going to rock the eco- Aldermore did in 2009. However, lenders will
America and the rest of Europe out of econom- nomic boat too much between now and next be seeking to forge closer working relationships
ic recession during 2010. However, the recovery June, but there is a recognition that after the with brokers in order to control both the quali-
will be slow and the very fragile state of our election the incumbent administration will ty and volume of new business and brokers
economy will leave it vulnerable to any future have no choice but to tighten spending and who are willing to adapt and respond to the
adverse shocks. The IMF’s chief economist, increase taxation. Neither will be popular and needs of lenders will definitely win favour. The
Oliver Blanchard, summed-up the sentiment of both have the potential to cause the fragile focus for the foreseeable future will be on cred-
many economists when he recently said: “The recovery to wobble and stall. it quality which means lenders will want bro-
recovery has started, financial-markets are heal- In summary, my reading of what’s likely to kers to present well documented and credible
ing and in most countries growth will be posi- happen in 2010 is that the economy will slowly applications and not waste time by testing
tive for the rest of the year as well as in 2010.” start to recover, but it will be very gradual and them with marginal cases.
The unprecedented support measures remain vulnerable to sudden shocks, especially However, I’m sure that many of you will feel
implemented by central banks worldwide has those bought on by a change in government the same as myself: we’ve been in similar situa-
helped to shore-up financial markets and give fiscal policy. There is light at the end of the tion before and have survived to tell the story.
the economy a fighting chance of recovery. tunnel, but there is still some way to go. I’m sure we can all do it one more time! January 2010 Mortgage Introducer
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