Macroeconomics: UK economy, IB Economics

More smoke signals from the Bank of England regarding the future direction of monetary policy, with the Governor, Andrew Bailey, signalling that there's little immediate prospect of a reduction in interest rates. Whilst inflation is expected to fall below 4% in Q1 of next year, getting it down any further still looks challenging. 

In the aftermath of the Budget there have been a number of criticisms of the Budget, and this BBC article outline four: the environment, the Covid-legacy, with no Covid-spending projected beyond April 2022, renters and social care - indeed. the Prime Minister promised us a social care plan.

However, for all of this, it needs to be borne in mind that it's impossible for the Budget to be all things to all men. 

It's rare to find intervention on this scale in the housing market. However, Berlin has imposed a rent cap in response to rising rents, in part induced by the private sector buying up a lot of previously social housing. 

As a result, a significant number of Berliners are in line for a rent reduction: however, to what extent is this a short-term fix, rather than a long-term solution to the problem, popular though it may be.

The state of play in the UK housing market - in both the homebuying and the rental markets - noting a recent slowdown in activity. However, it's interesting to note the background to all of this - the average house price is now 9.45 time average earnings, meaning that affordability is a real issue, and as a result of higher interest rates, house prices have started to fall, and rents have started to rise, as people look for substitutes. 

Another reminder of the extent to which "We're All in This Together" - not much at all, as the Labour Party are keen to point out. Another wave of the coronavirus is going to have catastrophic effects for some of the most vulnerable and, consequently, there are calls for a boost to Universal Credit, a ban of the eviction of tenants and the continuation of the existing mortgage holiday.