UK interest rates held at 0.5% for years

grey_gym_sock

Glen_Clark wrote: »

What is scuppering any decent economic recovery is Osborne making Buy to Let a better investment than productive industry.

certainly he should be investing in infrastructure and education, instead of inflating house prices. part of the problem is that he's been cutting productive investment.

Glen_Clark

grey_gym_sock wrote: »

certainly he should be investing in infrastructure and education, instead of inflating house prices. part of the problem is that he's been cutting productive investment.

Infrastructure certainly, Education is a bit like the NHS - a lot of money being spent but much of it wasted.
I was thinking more of productive industry being deprived of loans because Osborne has made it easier for bankers to lend the money to BTL landlords instead.

grey_gym_sock

Glen_Clark wrote: »

Infrastructure certainly, Education is a bit like the NHS - a lot of money being spent but much of it wasted.

they've cut some things that were great value for money. EMA is an obvious example.

i'm sure there's a lot of waste that could be cut out, but if it's a choice of keeping the baby and the bathwater, or chucking out both of them, i'd rather keep both.

I was thinking more of productive industry being deprived of loans because Osborne has made it easier for bankers to lend the money to BTL landlords instead.

the banks can't easily be persuaded to lend more to industry. but then sensible businesses are also wary about borrowing too much in the current environment. more confidence is needed first. so i'm not sure that promoting business lending is the place to start. (though if that were aim, the best approach would be to by-pass the banks.)

talexuser

bigadaj wrote: »

but if you look at the sheer numbers and predominance of voting by the retired and elderly, many of whom are suffering the cost of low savings rates Nd inflation,

And the betrayal of annuity rates after a lifetime saving. This has been curious to me too, given that the older savers tend to be the largest group of voters, yet have had virtually no media voice these past years in the strategy of inflate away the debt with savers paying the price. The old "there is no alternative" line seems to hold a peculiar sway over people.

grey_gym_sock

well, savers who are also big investors have generally done fine over the last few years. that covers some of the better-off pensioners. and there are plenty more with no significant savings. there's a group in between who've been losing out.

if you get very low annuity rates but your pension fund has risen strongly before you use it to buy an annuity, the effects might roughly cancel out. depending on the exact timing. but it's not as simple as everybody retiring losing out. and again, other ppl retire with either a final-salary scheme, or nothing but the state pension, so it doesn't affect them.

so, while there are losers, it's not all pensioners.

also, many ppl seem to be disappointed in pensions generally, for no clear reason, and with little understanding of pensions. so are just as likely to blame it on greedy advisors or somebody else as on government policy.

also, it's more difficult to argue with a policy which hasn't been openly declared.

buglawton

Check Saturday Moneybox on Radio 4 for a guide to the drains down which your managed investments (aka pensions) are going, see
http://www.bbc.co.uk/podcasts/series/moneybox
3rd and 10th Aug episodes "How You Pay for the City" parts 1&2

zerog

Glen_Clark wrote: »

when the Euro as introduced you got 1.4 Euros to the pound, so if we had been tied to the Euro the pound in our pocket would have been worth about 20% more

The euro might not have been as strong as it is now if the pound was tied to it.

Hadrian

Of course the Interest rate will stay at 0.5% for YEARS, the simple reason for that is so that you won't save but spend. That'll get the economy going again and then the IR will rise. You mortgage payers watch out and make plans NOW!

Glen_Clark

0.5% is just the rate the Bank of England pays other banks on short term (usually overnight) deposits. It had very limited effect on market interest rates when it was introduced 5 years ago. Its all the other wheezes - QE, 'Funding for Lending' 'Help to Buy' that have turned UK savings rates negative in real terms.
I read a comment in the Telegraph where Sir Mervyn King allegedly confided to friends that he could see George Osborne and David Cameron were not fit to run the economy. Thats pretty obvious I think, but since they have not been elected I thought someone might have reined them in by now and their most reckless schemes like 'Help to Buy' might have gone in the same bin as the pasty tax. But now that Osborne has put his own man - Carney - in the Bank of England on an £850k+++ package, and banished Vince Cable (the only senior politician who predicted the financial crash, and to deaf ears) to a toothless ineffectual department where his protests are being ignored again, there doesn't seem to be anyone about to rein them in.

buglawton

Well, policy has to get us set for a pre-election mini boom, doesn't it?