House prices to fall by a further 55%

Numis Securities, a City investment bank, is warning that house prices will fall by a further 55% on top of the 20% drop over the past year.

The Numis report is also critical of Government attempts to help the economy:

The Prime Minister and Chancellor have publicly stated that they want banks this year to lend at 2007 levels.  We think this is a crazy policy, given that too much debt was one of the prime reasons why the economy has its current problems.

The report goes on to paint a very bleak picture:

The bankruptcy of the UK is a very real probability as the UK Government is trying to stimulate a greater debt burden in a grossly indebted economy. We believe the scale of the macro imbalances in the UK means there is no prospect of a recovery in 2009 and we expect the UK to be mired in a deep recession through all of 2010.

John Lewis, the respected leading retailer, said yesterday that the cut in VAT had made little long term difference.

This is devastating news.  The majority of people have two main assets, their house and pension.  Both these are now on course for huge falls in value over the coming months.

It is becoming ever more clear that the majority of people are going to suffer real financial hardship that will take many years to correct.  The financial model that we have all depended on for our financial security is broken and maybe beyond repair.

ULK plc is out of money with with few options left to reverse the downturn.