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Financial downturn could last another eighteen months

October 7, 2008 by admin  
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According to an industry official the financial downturn that the nation is experiencing at the moment could last for another eighteen months until the property slump in the United States sorts itself out. Andrew Hornby, the chief executive of HBOS, said that it could take until 2010 for house prices in the United States to start rising again, and this could mean that the financial problems in the UK will persist for some time to come.

Hornby added that this meant that it could take eighteen months for confidence levels to increase amongst lender to the point where they will start to ease up on their lending criteria again. He went on to state that until the US property market starts to look healthier there is little that the UK government can do to boost the UK economy. According to Mr Hornby lenders in the UK are set to continue experiencing problems when it comes to mortgage lending until the US property market is sorted.

In an interview Mr Hornby stated: ‘It is going to be 18 months before US house prices have started to rise again, which is what is required for banks to have the confidence to start lending again. It will take a long time to play out.’

He also said that house prices were set to fall at a pace last seen in the dark days of the early 1990s.

A number of industry groups have now predicted that the nation is set to slide into recession by the end of this year. In the meantime reports claim that the admission from Chancellor Alistair Darling that the economy was facing its worst downturn in sixty years has affected his relationship with the Prime Minister Gordon Brown.

Tags: credit crunch, sixty, interview, uk government, meantime reports claim, long time, house, Economy of the United Kingdom

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