These figures, and a slowdown in manufacturing and service sector, have led to National Institute of Economic and Social research to predict that Britain was suffering a depression that will last longer than that of the 1930s. Even figures released by Office of Budget Responsibility [OBR] that showed growth of 0.2% in the Second Quarter of 2011 mean it will take longer to return to pre-recession figures than the equivalent in the 1930s. It will be 2013 at the earliest before the UK economy is back to where it was at its peak in the first quarter of 2008.
Andrew Smith, chief economist at KPMG, said: "Output has been broadly flat for the last nine months and – despite the depressing special factors – there is little reason to think things have improved much since. The big picture is that domestic demand is being weighed down by government cutbacks and falling real wages, and exports and investment are still not strong enough to take up the slack."
What of the outlook for commercial property in Birmingham?
2011 will see the real implementation of public sector cutback, amounting to around 1% of GDP. This will surely impact in two ways. Firstly, over 31% of the Birmingham workforce is directly employed in Public administration, education and
health jobs. That’s above the national average of 27% so job cuts will have a greater impact on the demand that drives construction in commercial property and housing.
Secondly, the cuts will also reduce the very spending on infrastructure and public housing that is currently maintaining any growth in construction.
It appears that for a while it may be a case of hard hat on to take the blows that will affect commercial property for some time to come.