The credit crunch affecting the world's money markets ought to have little effect on the UK economy .
The Confederation of British Industry (CBI) is predicting that economic growth is going to be slower in 2008 due to the upheaval in the credit markets.
The UK economy is of course in good shape to be able to ride out the present financial storm, with British businesses having grown well in 2000. The UK economy's fundamentals are also sound.
The CBI predicts growth in consumer spending, yet at a slower rate than past predictions as interest rates increase due to troubles on the financial markets.
Moreover, inflation is anticipated to increase slightly to the 2% target and remain there till 2008. This would mean that a rise in interest rates would be out and the Bank of England may even consider reducing the cost of borrowing.
The current upheaval has eradicated any expectations of higher interest rates this autumn. The CBI consider that the next move will be down.
The credit crunch is anticipated to have a "minimal short-term impact" on the housing market, so some estate agents claim.
Furthermore, the greatest impact is on borrowers with higher loan to value mortgages, secured at higher rates. First time buyers will especially struggle and need to depend more so on financial help from family members to get that first foot on the property ladder.
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UK To Fare Well in Credit Crunch Storm
Fri, 21 Sep 2007
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