Are we seeing the ‘green shoots’ of recovery?

Wednesday, 6th May 2009 12:42 - by GedW

• The latest published figures show that mortgage approvals have risen 40% to a nine-month high of 37,900 in February since a record low last November, while net mortgage lending increased from £1.1bn in January to £1.5bn in February. "There are increasing signs that the housing market activity may have passed its worst point" says Howard Archer, an economist at Global Insight. However, he warns that house prices may still fall another 15% and any upturn is likely to be "gradual and fitful". • Turning to retail, better-than-expected figures from the British Retail Consortium showed that sales edged up by 0.6% year-on-year in March. Economists believe that consumer confidence will return before the peak of unemployment next year, when employees are confident that their own jobs are no longer under threat. • Perhaps most importantly, corporate lending appears to be on the increase, showing signs of easing the biggest problem of the financial crisis – namely frozen money markets. The Bank of England's ‘Credit Conditions Survey’ showed banks that have shown an improvement in business lending outweigh those that have not by 7%. Many analysts expect business investment to fall by approximately 8% this year, but more available credit could improve this forecast. • Lastly, one benefit of the weak pound is that UK trade to foreign countries is strong, with exports of goods excluding oil rising by 3.5% in February. Furthermore, the decline in industrial output has also slowed substantially, to a fall of only 0.9% in March – the best figure in the last six months. I am sticking my neck out and suggesting the first phase of UK economic recovery has begun. What do you think?