CBI: UK need not fear US cold


The principal economist at the CBI has said that 2008 will not necessarily be as bad as some observers have predicted, in heartening news for business property owners and commercial property agents.

Speaking in light of suggestions that the US economy could fall into a period of stagflation in 2008, Lai Wah Co said it did not automatically mean the UK would catch the US cold.

Telling consumers not to be "overly worried" if such a thing was to happen, she reasoned that the "euro area is a more important export market for us".

"The US is less the sole driver of world growth than it once was," she argued, noting the growing influence of emerging economies.

Stagflation is sometimes used as a term to characterise slow growth, when inflation is high and unemployment rises, both typically dire conditions for the property market.

However, despite the recent credit crunch and the signs of US stagflation, many property experts are advising the industry not to panic.

Rics, for example, says it believes UK house prices will be "broadly unchanged" in 2008, particularly with the base rate tipped to fall back below five per cent in the first half, although it admits that in the short-term there is likely to be a minor correction.