The high cost of low prices

Article Abstract:

The prospect of a shift from disinflation towards deflation in the UK presents challenges for businesses. For property companies, this trend overturns the logic of a leasing structure developed in the inflationary climate of the 1960s and 1970s. If rents fall in the same way as prices, tenants will seek shorter leases. Deflation will also make it cheaper to erect new buildings than to maintain old ones. In a deflationary climate, the burden of outstanding debt rises in real terms.

Prices, Deflation (Finance), Deflation (Economics)

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The risks of change

Article Abstract:

Decisions about gilts and equities are being put off until the Conservative party leadership race has been won. Gilts and equities have been the subject of bullish feeling so far in 1995 in the UK. The 10-year benchmark gilt has a yield of 8.16%, compared to 8.71% at the beginning of 1995. Property has not followed the same pattern as gilts.

Stocks, Government securities, Real property

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Bankers' loyalty is a thing of the past

Article Abstract:

Changes in the way that British banks relate to their clients are examined in detail. There appears to be a trend toward taking a shorter-term perspective, though relationships with real estate companies may be an exception.

Commercial Banks, Commercial Banking, United Kingdom, Banking industry

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