Mixed fortunes but soft landing in 2008

Why did God create economists? To make weather forecasters look good. OK, it's an old joke. But it sums up the frustration felt when presented with such conflicting views on the state of the economy as those that have appeared since Gordon Brown brought us his "sobering New Year message" concerning the impact of the global financial downturn on the UK.

But there is, at least, some consensus. While the jury is still out on whether the slowdown in the UK economy will tip into recession later this year, most economists don't think so, and expect instead a "soft landing" in the second half of the year.

Specific concerns centre on the commercial property market, where development activity has seen its first decline for four and a half years, says property agent Savills. Last month, 22 per cent of developers reported a decline in business in November, against 12 per cent reporting a rise.

While most landscapers and growers supplying this sector don't expect the impact of this to hit until later in the year, in some areas the shockwaves are already being felt. As we report this week, one of the biggest names in house-building has already announced a five per cent clawback on prices from its suppliers (see news, p3).

Economists agree that house prices will fall this year - with the inevitable knock to consumer confidence. In turn, tougher credit conditions will mean a fall in consumer spending. Despite this, retailers in the garden sector remain bullish, particularly about the second half of 2008, on the grounds that firstly, consumers will continue to buy from those they enjoy buying from - that is, those with excellent customer service - and secondly, if consumers are cutting back on big-ticket items like a weekend away, they will spend more in their local garden centre. Meanwhile, those postponing a house move are likely instead to invest in their properties - and that includes their gardens.

Many businesses are confident, and may that confidence continue. But whatever 2008 has in store, businesses across all of horticulture's sectors will be focusing in the next few weeks on ensuring they are ready for the challenges ahead this year.

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