The UK economy will contract the most in almost three decades next year and house prices are now falling at the fastest pace since at least 2002, two industry reports showed.
Gross domestic product will drop 1.7 percent in 2009, the most since 1980, the Confederation of British Industry, the UK's biggest business lobby, forecast in a report. The average asking price for a home fell 7.1 percent from a year earlier, the most since records began six years ago, Rightmove Plc, the country's most-used property website said yesterday.
Bank of England Governor Mervyn King said last week that Britain is probably already in a recession, a week after policy-makers cut the benchmark interest rate by 1.5 percentage points, the most in 16 years. The pound fell to a record low against the euro as investors bet the economy's deterioration will intensify.
"The fast-moving and global nature of this crisis means it is impossible to look far ahead with any certainty," said John Cridland, deputy director general of the CBI, in a statement. "What is clear now is that the short and shallow recession we had hoped for a matter of months ago is now likely to be deeper and longer lasting."
The global financial crisis has prompted banks to scale back lending as they try to bring more capital on to their books.
Mortgage approvals held near a record low in September, and house prices fell by 15 percent last month, the most since at least 1983, mortgage lender HBOS Plc said.
The average UK asking price for a home fell 2.9 percent this month to 229,691 pounds, Rightmove said. Prices declined the most in the West Midlands, where they dropped 5.6 percent from October. London prices slipped 1.3 percent.
Source:China Daily/Agencies
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