Well, he promised it and he did it! Either he is ‘ahead of the game’ or he has acted rashly and only time will tell.
You shouldn’t run policy by newspaper headlines it is better to wait until formal economic data is available before you act.
I’m not sure that mortgage lenders will actually pass on any of these gains to the consumer but there is no question that a trend that points towards lower interest rates is far better for consumer confidence and the Property Industry than if they were inching up.
It is evident that the Bank Of England have no further room to manoeuvre from now as it edges towards the limit of its ability to control the money supply.
The best news is that the process of Quantitative Easing, or ‘buying up’ government debt, will have a stimulating effect on the Economy as it did after the Credit Crunch in 2008 when it was responsible for the UK growth, despite the austerity measures that Osborne employed at the time.
Quantitative Easing was the main reason why there was sensible growth in the UK and the USA over the last years and the EU’s reluctance to use this financial device, due to Germany’s fear of hyper-inflation borne from the 20’s, is the reason why the EU as a whole has not grown since 2006 and southern Europe presently suffers with 50% youth unemployment.
As I have said ad nauseam the four-month hiatus before the Referendum not only produced the wrong result for the government but contained a litany of horror stories that terrified the UK public into doing nothing in this period and the result of this will, undoubtedly, affect the economy in the 3rd/4th quarter of this year.
Mr. Cameron and Mr. Osborne’s obsession to win the Referendum, and put the UK’s financial stability at risk by doing so, was a very high price to pay for us all particularly as it ended in ignominious failure.
The good news is that this should boost confidence in the residential and commercial property markets allowing more deals to happen, as long as the lending institutions pass on the monies that they get from the government.
Not only would a drop in VAT encourage spending and help to reduce inflation but Mr. Hammond, in his ‘reset’ proposals in the Autumn Statement later this year, should look again at the ridiculous levels of Stamp Duty which has had such a devastating effect on the liquidity of the markets and has severely reduced SDLT Receipts for the Treasury.
It appears that the Pound has taken this measure in its stride and it does seem that confidence, generally, is improving as the populace becomes more comfortable with this Brexit issue.
We have seen a noticeable increase with international investors attempting to buy properties in the UK with the cheaper Pound and, although underlying property values in the prime and super-prime sectors have dropped by 1.5% in July, I believe these will stabilise over the next year or so.