It was announced on 24 October that GDP in the United Kingdom in the third quarter of 2008 fell by 0.5 percent. This follows nil growth in the second quarter, thus delaying for another quarter the inevitable conclusion that the United Kingdom is in official recession. It is nearly 16 years since the United Kingdom was last in recession — we seek to learn from history, but history does not always repeat itself.

Grosvenor is a privately owned property group with offices across the world’s main property markets. Its six regional and international businesses, covering development, investment and fund management, had total assets under management as at 31 December 2007 of £12.9 billion (ÄTK billion). Drew Campbell, senior editor at Institutional Real Estate, Inc., recently talked with Grosvenor’s Béatrice Guedj,head of research, continental Europe, about the potential impact on property markets of the ongoing turmoil in the world’s financial markets. Guedj is based in Paris and is responsible for both economic and property market research in Belgium, France, Italy, Portugal and Spain. [This job description explains why Guedj does not discuss developments in the United Kingdom, arguably the European market displaying the most obvious effects of the adverse changes in economic and property market fortunes. — Ed.]

The financial world is in deep turmoil, and the shocks are about to be transmitted to the real world in the unwelcome form of economic recession. Time will tell, but recent developments in the global banking industry, and the effects of those developments on stock markets and economies around the world, could undoubtedly affect institutional investor behaviour for years to come.