GLOBAL - No economic model or financial forecast will accurately predict what happens in the next six to 12 months - except by pure chance, European Public Real Estate Association (EPRA) economic commentator Anatole Kalesky has claimed.
The editor-at-large and principal economic commentator of The Times of London, said he believed Britain would recover more quickly than continental Europe because of a weak currency, a more pro-active monetary policy, less dependence on house-building than Spain, Ireland and Denmark, less exposure to global capital-goods cycles than Germany and less vulnerability to financial tensions in the euro-zone and its central European periphery than Austria, Italy, Greece and Scandinavia.
However, he said it was equally possible Britain's economic dependence on wholesale financial services, combined with the direct support to manufacturing industries offered by continental governments, would tilt the balance the other way.
Kaleski added there was a risk that governments would overdo the fiscal stimulus and central banks would keep interest rates near zero too long, because the speed of recovery was so uncertain.
As a result, he said this year's deflationary conditions might be followed by accelerating inflation in late 2010 and beyond.
A third conclusion he drew in his quarterly forecast was the financial crisis would permanently alter the structure all European economies - but also that the financial sector would not just disappear.
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