Recent data published by the Office for National Statistics has revealed that the economy in the UK shrunk during the months of October, November and December 2010.
Reports on this subject mention that this data has shocked and surprised many economists and leading financial figures which I find very strange indeed. Did they not think that people would be bracing themselves for the public sector spending cuts, increase in VAT, hikes in utility prices and looming threat of interest rates rising? I am sorry but I am not an economist, statistician, financial adviser or fortune teller but even I could see that people would be curbing their spending habits which would lead to a contraction in GDP.
I am also rather amused that some people put this contraction in the economy solely down to bad weather. Yes this may have played a part as many were unable or unwilling to live normal lives when temperatures fell to a record low but even if the sun would have shone throughout the last 3 months of the year, I suspect the figures would have still been painful reading.
What does this mean for the commercial property market? Well, put simply, businesses are still suffering, business owners are therefore still keen to sell, the market is saturated by these sellers who are unable to sell, commercial property values are still falling and whilst banks continue to stockpile cash, and show a continued reluctance to lend, the next 12 months look very gloomy indeed.