By ADRIAN LOWCOCK 26/06/2009
A round up of the latest major economic news and developments.
Pay deals lowest since 1971
As further signs of the recession are starting to effect the wider economy IRS, an industry Journal, reported that the median pay rise, in the three months to the end of May came in at 1.3%, which is the same as in April and the lowest since records began in 1971. Most of the pay rises, occurred within the public services sector, up 2.5% over the 12 months to the end of May. The private sector pay deals hit a record low, of 0.9%, as the majority of pay deals in this sector are linked to the Retail Price Index (RPI) measure of inflation.
Housing market outlook improves
A recent Reuter’s poll of 35 financial analysts showed the majority expected property prices to continue to deteriorate in 2009 by 8%, remain flat in 2010, before recovering 2% in 2011. This is an improvement on the results of the survey in March, in which participants expected prices to continue to fall 4% in 2010. The poll also found that monthly mortgage approvals have risen to about 65,000 in the last year. This was a big improvement on the 36,000 predicted in March but remains lower than the 104,000 received in 2008.
Economy to shrink 4.3% in 2009
The Organisation for Economic Co-operation and Development (OECD), a Paris based think-tank, this week said the British Government has little room to spend more money and said that effects of the Bank of England’s quantitative easing policy of effects were unclear. The OECD expected the UK economy to shrink by 4.3% in 2009. Their forecast for this year has deteriorated since their last in March, when it predicted the British economy would shrink by 3.7%.
Britain’s downturn is much sharper than the US, where the economy is forecast to shrink by 2.8% in 2009. However, it is less severe than Japan and the Euro zone, where output is expected to fall 6.8% and 4.8% respectively.