a The booming private sector housing market is one of the basic building blocks of economic activity. That is the view within the Treasury and nothing in the past 50 years — neither the widening wealth gap, nor the risks that come with a growing dependence on an unstable asset market — has shaken that view.
After every recession, even when property collapses are the cause, officials dip their No. 11 into their toolkit of recovery measures and choose a tried-and-trusted method to get the economy back on its feet.
And, most bluntly, ministers use incentive Housing price hike To start what they really want to see, which is more transactions.
That’s why Rishi Sunak has responded to the pandemic by cutting stamp duty on home purchases to zero on homes under £500,000. The effect can be seen in . format The latest nationwide house price numbers, which shows the median UK house price was £252,687 in November, up 10% on the previous year.
Sunak’s mission was backed by street lenders who cut their profit margins to the bone, with the help of ultra-low interest rates from the Bank of England, to maintain market share.
It moved transactions forward and saved a financial system based on mortgage sales out of trouble, but at the same cost as continued dependence on a financial system based on mortgage sales and widening the already growing real estate wealth gap.
Some commentators have predicted that the price travel trend will moderate or even reverse. The Office of Budget Responsibility, the Treasury’s independent forecasting expert, predicted in October that home price growth would decline once stamp duty subsidies were phased out in the fall, to just 0.5% in 2023.
It may be too early to call, but a 10% annual increase in November indicates that these forecasts are flawed and The market quickly adapted to life without support.
Generally speaking, speculative sellers – which could be new building developers or individuals willing to sell at the right price – have pulled their homes off the market to match the low level of demand.
Sales were down 28% in October from the previous month and are likely to remain low in November and at least until the threat from Covid wears off.
This should mean Sunak emerges from the pandemic with deeply charged home price inflation without the transactions that support a healthy housing market.
Vaccine hoarding leads to random recovery and stoppage of initiation
It is tragic that months of work by companies and governments to sort through global supply chains, an effort that was making clear progress through the fall, will collapse if Omicron turns out to be a strain that defeats the Covid-19 vaccine.
Port layoffs have eased and retailers were expecting to fill large numbers of empty shelves before Christmas rushes in. Now they are not sure.
In its predictions for 2022The Organization for Economic Co-operation and Development (OECD), says it cannot tell how Omicron will affect the broader recovery.
He could say that some disruption in supply chains is a possibility and that means shortages in the coming year. Inflation, at 4.2% in the UK already more than double the Bank of England’s 2% target, is likely to remain high for a longer period, as are inflation rates in most developed countries.
Keeping the recovery strong and on track will require addressing a number of imbalances, “but above all it will mean managing the health crisis through better international coordination, improving health systems, and stepping up efforts on a large scale,” said the Paris-based adviser to 38 mostly wealthy countries. Broad. Vaccination programs worldwide.”
This message is still unheeded. Even from a selfish perspective, wealthier countries may have avoided another Covid-19 boom if more vaccinations had been made available in South Africa.
International coordination is supposed to take place at the World Trade Organization as delegates from the Global South this week wanted rich nations to waive vaccine patents, forcing Pfizer, Moderna and other high-cost vaccine makers to be more benevolent than they have been so far. .
Talks are deadlocked while the European Union and the United Kingdom play leading roles in preventing the concession.
The Organization for Economic Cooperation and Development It cannot impose sanctions on its members for acting against its advice. It could only induce them to share the vaccine as part of a more thoughtful and strategic recovery from the pandemic.
Currently, its projections for recovery are based on random recoveries, stops and starts resulting from vaccine stockpiling.
The lack of global coordination on the vaccine rollout “was putting all of us at risk,” said Lawrence Boone, chief economist at the Organization for Economic Co-operation and Development.
The UK is among the countries that pay Bonn salaries. Unfortunately, this does not mean that she listens to her words of wisdom.