One of the City's best known economists Roger Bootle said the world economic situation is deteriorating and there is still worse to come but the situation will start to improve by the middle of next year.
Bootle, speaking at Property Week's Resi 08 conference at the Celtic Manor in Newport, said the US was in 'some form of recession' and that the UK was heading towards a recession. However, while the Eurozone has been impacted by the global credit crunch it would weather the storm better.
Laying the blame for the credit crunch firmly at feet of bonus-driven bankers who have lended irresponsibly becuase 'they thought there were clever when what they needed was wisdom and a lot less money' he said the liquidity crisis would continue for some time. He said 'the bubble that we have just experienced and the type of financial practices that fueled it will never be seen by us again. Politicians and the public just won't allow it.'
Bootle was extremely downbeat on unemployement and said that an esitmated job loss in the UK between 500,000 and 1m jobs was 'not a silly figure' and this would have an impact on the housing market. He said there would be a further drop in house prices of between 25 and 30%.
However, the economist who has long predicted a downturn of this nature, said it was not all bad news. He said he expected interest rates to 'plunge' next year and inflation to drop while falling commodity prices, which has also helped fuel the boom, would ease some of the pressure in the global economy.