The United States’ former Central Banker and one of the most respected economist, Alan Greenspan, gave his take on the British economic situation in an interview with the Daily Telegraph yesterday.
Though he remains confident that Britain’s troubling economic trials will be subdued by its overall strong economy, his main concerns were in the housing market and the credit crunch.
Britain’s higher interest rates, explains Greenspan, slows (and will eventually freeze) the house price growth. Consequently, recent increases in home prices, specifically in London and South East, are considered unsustainable due to the mortgage rates’ significant increase after the introductory period.
Furthermore Greenspan predicts that the credit crunch will cause inflation to pick up dramatically in the coming years.