Monday, November 16, 2009

Demand for goods the problem in UK

In a report from the British Chamber of Commerce, BCC, they have surveyed a number of small and medium sized firms. Lack of credit for the firms is a problem, as the banks keep tight control of the purse strings, however it is a lack of demand from consumers that is giving them real concern.
Is this evidence of a genuine drop in demand and change in spending habits (perhaps not a bad thing) or is it a function of the banks curbing consumer credit, so that people cannot spend on credit like before ?
Either way, the banks seem to hold the key.
From Spain, we hear that the Tinsa property valuations index is now showing the lowest decrease in property prices for a couple of years, showing prices only 13% down from their peak. Quite how this ties in with the demand versus supply of unsold property I am not clear, but prices can only fall so far, before sellers will just not sell. Nobody would sell for less than their mortgage outstanding anyway, and people with low or no mortgages will probably not be too worried about selling.
Thanks for reading.

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