Following the hard to believe NIESR forecast that the UK was likely to grow quite well in the next year sane voices basing their arguments on reason returned to the economic stage yesterday. As the FT notes:
Charlie Bean, a former deputy governor of the Bank of England who now produces the UK government's official macroeconomic forecasts at the Office for Budget Responsibility, said on Wednesday that British households were realising their incomes had started to fall and would rein in their spending, potentially leading to “quite a sharp slowdown”. Investment and export demand are unlikely to grow strongly enough to offset a slowdown in consumer spending, he added.
That's short, to the point, and considerably more likely to be right than the NIESR forecast, in my opinion.
Add in a stock market correction that is clearly well overdue, failing car and personal loans and you get considerable bank stress as a result. If this then leads to mortgage risk as households are unable to pay their debts then ten years after the first signs of the Global Financial Crisis of 2007 - 08 emerged all the signs of the next one are just sitting there, waiting to go.
This is, of course, avoidable. We could have a Green New Deal to avert the crisis. But I'm not holding my breath. It didn't happen last time and as yet I can't see politicians doing the right thing this time either. But I can hope.
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Well said on the Green New Deal. With the right people in charge a National Investment Bank funded by QE, an EcoFund or similar could be set up. House builders and maintainers could apply for funding from this central government pot to incorporate UK manufactured insulating materials in the construction and refurbishment of residences in all constituencies.
“House builders and maintainers could apply for funding from this central government pot to incorporate UK manufactured insulating materials in the construction and refurbishment of residences in all constituencies.”
Might this not be problematic from an EU perspective? Would not the funding have to be open to any EU business and the materials likewise?
It’s not a problem in other EU countries
And I think we’re leaving
Do you know otherwise?
@Richard “It’s not a problem in other EU countries” – How is this achieved without breaching EU competition laws etc?
The laws have been broken
That’s the fact
Speaking of government pot, why not let hempcrete or something similar be one of those building materials? We’re short of housebuilders now in the traditional mold, Thatcher having ended the necessary apprenticeships and companies finding it easier to employ trained experienced immigrants rather than train locals themselves. If we’re going to be training local people as opposed to seeing lots of the newly created money flow out of the country, why don’t we train them in visionary techniques likely to be in demand in the future, processes like 3d printing houses using materials grown from hemp?
Without State intervention, under the prevailing economic matrix, capital flows pretty freely to where profit can be extracted as rapidly as possible to generate maximum financial reward for shareholders. Simples! Of coursei It’s the economics of the madhouse but it’s not going to change anytime soon. At least not the next financial melt-down which, according to RM and many other wise men, could happen sooner rather than later. But, even then, will the requisite lessons be learned? Based on historical trends, I rather doubt it. Both the UK and the USA will probably be the last bastions of neo-liberalism with the resultant destruction of the nations’ social fabric. So, no sensible long-term solution to the housing crisis (which as you say can be resolved technically) is likely. Not even a Corbyn administration would have the cajones and intellect to follow Richard’s sound, long-standing advice.