7 December 2022 - Economy most likely already in recession

Beyond Currency

One of the keys to the potential depth of the recession that may have already begun is the weakness of the housing market and how much average house prices will fall across the entire country. Every sector of the economy feeds into the housing market; employment, productivity, output, manufacturing, import of goods and lending. It is a key barometer of the health, or otherwise, of the economy. The latest data shows that although prices are continuing to rise, the size of the increase, reported monthly, is falling. Last month it fell from 8.6% to 7.4%. That fall is likely to fall into negative territory as activity slows, and interest rates continue to rise. In normal circumstances, the Central Bank would be loosening monetary policy to encourage activity in the market. As interest rates fall, those considering moving house or even remortgaging the property they occupy presently, are more likely to enter the market. In the current situation, the Bank of England is continuing to tighten monetary policy by hiking interest rates, this is usually done to flatten demand and slow activity, but with the economy failing, and inflation rising it is in a difficult situation. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.