Falling prices 'will aid recovery' - commercial mortgages

14 November 2008

Falling commodity prices will help the economy to recover and could actually be good news for businesses, it has been claimed.

Michael Baxter, an economist for Defaqto, has predicted that many organisations will announce heavy discounts in the run up to Christmas, offering benefits for consumers and businesses alike.

And this could in turn aid the economic recovery, he said - news that firms with commercial mortgages may welcome.

"I am sure there is going to be discounts this Christmas like we have never seen before … that's how I believe the economic recovery is going to occur; because prices are falling," he remarked.

Decreasing oil and food prices as well as cuts in interest rates will help to alleviate pressure on businesses and mortgage holders, Mr Baxter explained.

In November, the input prices for manufacturers' materials fell 5.6 per cent on a month-by-month basis, according to the Office for National Statistics.