Following the Bank of England’s decision to maintain interest rates at their present level, James Roberts, head of Central London commercial research, Knight Frank, commented: ‘I would have preferred to see the Bank take a wait-and-see approach to further Quantitative Easing, as the actual condition of the UK economy appears uncertain.
The first estimate of Q3 GDP released last month was based on 44% hard data and 56% computer forecasts.
It is possible those computer forecasts are backwards looking, and when more real data becomes available the figures are revised upwards.
In the last ten years, on five occasions between first estimate and final data the GDP figures have increased by a level sufficient to wipe out the Q3 contraction.
After all, does it sound right that a trading nation like the UK could still be in recession when its largest trading partners are expanding again?
‘Turning to the London office market, the Q3 figures were relatively good, with take-up rising in the City and West End, and availability falling in the City.
Since quarter end we have seen further large deals go under offer in the City. In the short-term, further QE will help confidence and keep money flowing into the financial markets which are important as a source of office demand.
However, there is the long-term risk that unnecessary further stimulus is about to go into the London economy, with an inflationary aftermath further down the line.
