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Gloomy start to the year

Gloomy start to the year

The UK housing market enters the new year in a sombre mood after the Nationwide Building Society reported that the average cost of a home fell 0.2% in December, the first monthly drop since August. The report states that prices may decline further in 2012 as the economic crisis in the Eurozone pushes up unemployment and undermines consumer confidence.

The depressed state of the UK housing market was further evidenced by a Halifax report advising the number of first-time buyers fell 7% in 2011 despite house prices declining to their most affordable level in 8 years.

Spanish Economy Minister, Luis de Guindos announced that his country’s deficit is likely to be as high as 8% of GDP for 2011 rather than the 6% previously thought, reigniting market fears over the region’s ability to manage their deficits in 2012.

The Eurozone ended the year with further evidence of the slowing economy with the manufacturing PMI for December showing its fifth monthly decline, although at a slightly slower rate than November’s 28 month record low. The index rose slightly to 46.9 from 46.4 the previous month, any score below 50 represents a contraction. The survey also pointed to a strong likelihood of further declines in Q1 with producers cutting back on headcount, inventories and purchasing.

Wishing you all a happy and prosperous 2012.

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