Britain has been popping the champagne corks over the economic recovery that has been announced and the bubbly has been flowing. They might want to leave the EU but, they still import more champagne than any other country. But it’s not only more champagne being glugged down, but also more sparkling wines than anyone else that will be imported by 2016. The Brits down over 126 million bottles of the stuff every year.
Drunken stupor or do they have another reason to celebrate?
- George Osborne, the UK Chancellor of the Exchequer believes that there is every reason to get the bunting out and start another street party these days as construction activity is at its highest growth rate for six years.
- The Purchasing Managers’ Index for the construction sector of the economy stands at 59.1 for August.
- Manufacturing PMI stood at 57.2 for the same period and that was the best figure recorded for nearly threeyears now.
- In April Gross Domestic Product was estimated to turn out to be at around the 0.5%-mark for this year.
- Now, it seems that after the upturn over the summer months
- The upswing in the UK economy may have been fuelled by the frenzied buying that took place after the birth of the royal baby and the hot weather that brought the sun-basking Brits out in droves to catch the sun.
- Now Gross Domestic Product is set to expand by at least 1.5% for this year.
But the UK shouldn’t be celebrating just yet! There’s a housing bubble that is forming and it is ready to explode yet again in repetition of the start of the global financial crisis. At least, we can safely say that they have already done the dress-rehearsal and so anything that busts in the UK these days they may just be prepared for. Or will it be the final curtain?
Interest rates are historically low and the various schemes that have been introduced by the British government are fuelling the ability to buy for first-timers. There is a growing risk that the housing bubble is expanding more and more and that it can do nothing but burst. Employment has not been fuelled by injection of money into the economy at all and so the housing bubble will become largely unsustainable. Growth in the UK is still not enough to enable the economy to get back on its feet.
The UK might have cause for concern over its housing bubble, but China is also a worry in that it is overly confident to believe that its housing market is invincibly strong.
China’s 3rd richest man, Wang Jianlin believes that tapering by the Federal Reserve (if and when it happens) will have no effect on the property market in the People’s Republic of China. He believes that the Chinese economy does not move in motion with the rest of the global economy and that because profit for the real estate industry in China are above that being experienced in the rest of the world any rise in interest rates after tapering will have no effect or a limited one. Profits averaged out in China for the property developers at around 34% for the first six months of this year. The second half year is expected (as always in the sector in China) to be better than the first.
But it seems surprising that China believes that it is isolated from the rest of the world’s economies and that it doesn’t move in step with what is happening. Is that the reason why the Chinese economy is no longer experiencing the good level of growth that it had in the past?
- However, the recent figure released yesterday hint at the fact that the Chinese economy is set to expand in the second half of 2013.
- Industrial output increased by 10.4% for August year-on-year figures.
- Retail sales hiked by 13.4% for the same period.
Jianlin has a net worth of $8.6 billion and is in the real estate business. He is the 128th richest person in the world. In2012 his company Dalian Wanda opened 12 five-star hotels around the world and also 17 shopping plazas.
So, will the UK see it’s bubble burst and will the Chinese isolate themselves from tapering?
Whatever happens dress-rehearsals are all well and good, but something always goes wrong on the opening night of the play and these events are not going to be an exception. The UK will suffer from the consequences and the housing bubble can only go so far. Patching the tears in the seams is not going to do any good right now. Maybe the growing imports of champagne and sparkling wine will have one saving grace. The Brits will certainly be able to drown their sorrows by turning to the demon drink. What will the Chinese be supping on when there bubble burst?