New reports showing an apparent turnaround in the UK housing market should not be taken as evidence for a sustained economic recovery, an economist has claimed.
Britons should not get too excited about a rapid economic recovery, a leading business group warned today.
Analysis from the British Chambers of Commerce suggested that recent reports showing new "healthy signs" for the recession-hit UK economy were encouraging. However, David Kern, chief economist at the group, added that the view that the data signalled a sustained recovery from the present downturn was "premature".
The new reports centre on the UK property market, one of the areas of the economy worst-hit by the credit crisis. Constrictions in mortgage supply have seen loan approvals fall by 50 percent year on year, while house prices have shown an annual drop of over 15 percent.
However, the latest house price index from building society Nationwide showed a 0.9 percent monthly rise, while the Council of Mortgage Lenders and the Bank of England registered small increases in mortgage approvals in recent surveys. Chartered surveyors also reported yesterday that buyer enquiries had increased again in March - the fifth monthly rise in a row.
Taken together, these reports have been viewed by some observers as representing "green shoots" of recovery. This would follow an economic downturn that has been near-unprecedented in its severity - official government figures showed that overall output for the UK shrank by 1.6 percent over the last three months of last year - a figure that is expected to be matched by upcoming data for January-March 2009.
Mr Kern commented: "Across the board [there are] a number of healthy signs but it is too early to talk about the 'shoots of recovery'. We all welcome these signs but I think it is premature to call it the end of the recession."
He added: "The real issue in the economy is that the pace of decline will continue to moderate but an actual upturn in activity on a minimal scale is unlikely before the end of the year but in terms of things moderating that is good news."
