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03/10/2008
House building hits '50-year low' |
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New house building is at a 50-year low and is evidence that the UK is now in recession, according to research by the Independent.
Sean O'Grady, economics editor at the paper, reported that even though the construction industry takes up just six per cent of GDP, the weakness of the economy as a whole could mean that the industry's problems push the UK into "a slump".
In addition, the issues could affect the government's targets for new housing, Mr O'Grady warned.
Michael Saunders, an economist at Citi European Economics, explained that the situation was being made worse by the lack of available mortgages.
He described the situation as a "vicious circle" where banks are "cutting back" lending to individuals and companies because of the gloomy economic outlook, a reluctance to take risks and reduced access to funds.
The reduction in the supply of credit has exaggerated the downturn which he said will in turn "reinforce the reluctance of banks to lend". |
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