Wed, 29 Apr 09
Property prices are still too high in the UK and the promised turnaround later in the year forecast by Alastair Darling in the Budget 2009 is unlikely, say the International Monetary Fund (IMF).
House prices have already dropped by about 20 per cent, but despite estate agents and developers talking up the market, property is still over valued, claims the IMF.
IMF analysts point out that the UK property boom was bigger than that in the US, where house prices have plummeted since 2006 and the rate of decline is still increasing.
Darling claims his forecast has been well thought through - but the Government did not see the recession coming and has failed to meet financial forecasts several times in the past.
The loss of wealth from falling house prices and rise in unemployment is denting public confidence. Consequently, the IMF expects recession to continue well into 2010. Britain also has higher inflation than any other major economy, at 1.5 per cent this year.
The IMF’s analysis, published to coincide with the gathering of the world’s finance ministers in Washington this weekend, will make uncomfortable reading for the chancellor.
IMF’s Managing Director Dominique Strauss-Kahn, has said that part of the organisation’s job was 'naming and shaming' Governments - and admitted that it can be hard to convince policy-makers to follow its advice.
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