UK Recovery Is Strong - IMF Staff Report

The IMF recently published a staff report showing that the UK economy is growing quickly and the growth is expected to continue. The recent growth has been stronger than expected and the predictions are that growth will continue to be above expectations at about 3% rather than the 1.5% predicted earlier. Growth at the start of the recovery was based on consumer spending and an increase in consumer confidence along with easer credit conditions. Growth is now also due to more business investment as the confidence has spread from consumers to businesses.

The recovery is expected to continue but there are always risks. Domestic risks include uncertainty about future productivity growth and worries about financial risks coming from the housing market. Externally, the unwinding of unconventional monetary policies in the US and weak growth in both emerging and advanced economies and geopolitical tensions are seen as the areas of most risk.

The UK housing market has seen house prices grow very quickly in London and the rest of the UK as well. Rapid house price inflation can lead to serious risks for buyers who borrow more than they can afford leaving them vulnerable to shocks to interest rates or incomes.The authorities have already taken some steps to contain the financial risks. The first line of defence was the 'macroprudential' measures including loan affordability and limits to the share of new mortgages that feature high ratios of loans to incomes. These measures may take some time before they begin to have an impact. The effects will have to be monitored and settings adjusted accordingly if required. Inadequate supply is the main driver of the increase in house prices. Unnecessary constraints on planning should be lifted to ensure the ax system encourages the most appropriate use of land and a consensus reached to relieve the supply problem.

Monetary policy should remain accommodative for now and should support the recovery at least until signs that inflation is rising appear or that costs are increasing above productivity growth.

More Green Belt Statistics UK

The latest Green belt statistics from the DCLG tell us that on 31 March 2010 there was an estimated 1,639,560 hectares of designated Green Belt land in England. This amounts to about 13% of the total land area of England. The designated Green Belt area of England in March 2009 has been revised and the estimation is now 1,639,650 hectares which amounts to an increase of 810 hectares on the estimate published by DCLG in April 2009. The difference is due to the correcting, improving of measurements of local authorities using digitised data from geographical information systems as opposed to paper maps and Positional Accuracy improvements by the Ordnance Survey. The Comprehensive Spending Review resulted in Departmental Strategic Objectives on Planning which relate to net change in the national area of Green Belt land. The indicator used for this is sustaining the level of Green Belt nationally measured regionally. There has been a net real decreas decrease of 80 hectares between April 2009 and March 2010. The difference is due to new plans being adopted in South Cambridgeshire (70 hectares) and the Mole Valley (10 hectares).

Green Belt policy comprises five purposes for including land in designated Green Belt areas. They are to check urban sprawl, to prevent the merging of neighbouring towns, the safeguard the countryside from encroachment, the preservation of the setting and character of historic towns and to help urban regeneration by encouraging the recycling of derelict and other urban land. Green Belt land once identified can then provide the urban population with opportunities of access to the open countryside and outdoor sport and leisure, the retention and enhancement of landscapes near inhabited areas, improvement of damaged and derelict land, nature conservation and the retaining of land in agricultural, forestry and other related uses.