They go on to say that this decisive action will have the following effect:
· House prices will stop sliding and by Q2 2009 prices generally will have stabilised at 20% less than the 2007 Q2 peak but provincial City Centre flats will be 35% off peak.
· 1 million more homes which would have been shown to be in negative equity during Q1 2009 will now be reprieved
· Repossessions will soon peak: abject misery to hundreds of thousands has been averted
· LIBOR will remain heavily weighted over Bank Base for another 6 months but we’ve seen the worst.
· The horrors of deflation have been avoided
The downside is
· The £ will plummet against the euro and the dollar (sub $1.50 and little better than Euro parity)
· Although inflation will fall to 3% in Q1 2009 it will increase to 6% by Q4.
· Because of inflationary pressures, this will be most damaging to retirees on fixed incomes but it will mean the next generation may be able to afford to retire.
