Telegraph warns of "Period of Austerity"

bernard_shaw

Inflation will rise significantly above the Bank of England's 2pc target and consumer spending will drop by 0.7pc in the opening months of next year, in the first taste for British households of the period of austerity that is an inevitable consequence as the Government puts its books in order in the coming years...

http://www.telegraph.co.uk/finance/economics/6879463/VAT-rise-will-mean-months-of-stagflation.html

A surprisingly downbeat article in the usually Panglossian Telegraph quoting the usually equally Panglossian CEBR.

Stagflation? Compartflation? Biflation? Disinflation? Imported inflation?

And here was me thinking that "inflation will only come with growth at this point.";)

I wonder if there are any factors other than inflation which might put pressure on the BoE to raise rates?

BlondeHeadOn

Hmm. Reading the second link in the above post, I found the following:

"The CEBR has also predicted that UK house prices will continue to grow in 2010 – albeit at a slower pace than in 2009, with property prices finishing the year between 2pc and 4pc higher than today. It has also predicted that by the end of 2012, house prices will be around 15pc higher than today.
The prediction comes as fresh figures show that house prices stalled during December with the number of new buyers falling for for the first time in 11 months. "

Up? Down? Stagnate? Conflate? Reflate? Inflate? Deflate?



Who the f*** knows....

bernard_shaw

BlondeHeadOn wrote: »

Hmm. Reading the second link in the above post, I found the following:

"The CEBR has also predicted that UK house prices will continue to grow in 2010 – albeit at a slower pace than in 2009, with property prices finishing the year between 2pc and 4pc higher than today. It has also predicted that by the end of 2012, house prices will be around 15pc higher than today.
The prediction comes as fresh figures show that house prices stalled during December with the number of new buyers falling for for the first time in 11 months. "

Up? Down? Stagnate? Conflate? Reflate? Inflate? Deflate?



Who the f*** knows....

Indeed. All in all, not a great environment in which to risk your capital. History tells us (via Niall Ferguson) that the real interest rate always rises following periods of sovereign debt expansion. A 2-4% uplift in property prices is easily outstripped by returns from high street BS a/c's - so that's not an increase in real house prices at all.

amcluesent

Every bad result of Labour's bungling in the 1970's has come around again after Clown's disastrous time in office. Except run-away inflation. I can't see any reason why that economic problem won't be added to Clown's tawdry 'legacy'.

julieq

Except, obviously, you can't live in a high street building society account.

Living somewhere (or renting out somewhere for someone else to live) has a significant additional value.

bernard_shaw

julieq wrote: »

Except, obviously, you can't live in a high street building society account.

Living somewhere (or renting out somewhere for someone else to live) has a significant additional value.

I think that all of us live somewhere.

Thrugelmir

Many people may be using the word austerity in the wrong context thinking of personal circumstances.

In economics, austerity is when a national government reduces its spending in order to pay back creditors. Austerity is usually required when a government's fiscal deficit spending is felt to be unsustainable.

tomterm8

amcluesent wrote: »

Every bad result of Labour's bungling in the 1970's has come around again after Clown's disastrous time in office..

Not yet. Margaret Thatcher hasn't happened yet. Give it time.

Bootski

bernard_shaw wrote: »

I wonder if there are any factors other than inflation which might put pressure on the BoE to raise rates?

Yes, and Austeriy isn't one of them:D

Thrugelmir

tomterm8 wrote: »

Not yet. Margaret Thatcher hasn't happened yet. Give it time.

But history tells us that we need somebody with the drive and self belief to take the necessary corrective action. Irrespective of political beliefs, the current ecomonic situation needs somebody prepared to be unpopular at the outset.

Bootski

tomterm8 wrote: »

Not yet. Margaret Thatcher hasn't happened yet. Give it time.

Nobody's got the Cojones now to do what she did a leader. That's why she's so well remembered.

:rolleyes:#

Credit where its due!

And a woman, at that???.... Go figure