How this recession was described six months ago'

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How this recession was described six months ago.

• As this began the commentary was around
• Sub-prime lending in the US which led to a
• Credit crunch
• Impacts shifted to the real economy
• Focussed on financial services??
• White collar jobs to get hit??

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How have things played out so far?

• Collapse in manufacturing
• Collapse in trade
• De-leveraging
• IMF talk about
• Balance sheet recession
• Globally synchronised downturn

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Global synchronisation
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UK Manufacturing hit hard especially in autos
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How has the recession played out spatially?

• Talk about the epicentre of the recession being
  located in London
• Regionally, impact doesnt look like that
• W Mids has seen the highest rise in CC
• Many poorly performing cities have been hit
  harder
• London looks like it is holding up quite well
• Retail, Claimant Count, House prices

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Output growth London and the UK
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Retail has held up in London
Exchange rate effects?
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Outside London we have seen higher rises in CC
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Outside London we have seen higher rises in CC
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London employment growth was holding up until Q1
2009
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House prices falling in line with UK
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Price expectations slightly more buoyant
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Claimant count within London
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What about other UK cities?

• We only really have timely data on
• Claimant count
• Vacancies (pretty flaky!)
• The pattern of spatial impacts shows
• Weaker cities have been hit harder
• Focus of jobs losses around manufacturing
• Especially autos

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• Top ten UK cities

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• Bottom ten UK cities

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Looking ahead

• Green shoots to wither? (Significant headwinds)
• But policy response very strong plus spare
  capacity
• Balance sheet adjustments significant
• Fiscal position has deteriorated markedly
• Have house prices adjusted fully?
• Public sector to be squeezed from 2011
• What will replace the drivers of growth in the
  last decade
• (financial and business services, construction,
  retail and the public sector)
• Business services?
• How dependent upon financial services??

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Looking ahead

• Spatially,
• London and GSE expected to recover faster
• Employment growth in many core cities hardly
  recovers to previous peak over forecast horizon
  (10 years)
• Nationally employment tends to recover to
  previous peaks in 8 years but this time feels
  much worse

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London GVA OE forecasts
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Total employment in London OE forecasts
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Sectoral outlook in LondonOE forecasts short
term
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Sectoral outlook in LondonOE forecasts longer
term
Bounce back to trend??
Public sector Employment Growth?
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Why might we expect London to be proving more
resilient?

• Service sector cant cut output the same way as
  manufacturing
• More highly skilled labour
• More flexibility in professional services
• More diversified economy
• and net tourism
• Has/Is brought forward investment benefited
  London?
• Infrastructure and public sector

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and finally

• A few more charts
• Note no discussion about US/UK banking system
  solvency
• Or aggregate debt levels

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Have house prices really reached bottom?
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I doubt it.
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What happened to house-price to income ratios in
Japan?
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US House prices
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House price misalignments
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Lest we forget.