Bank of England Steps in to Restore Stability After IMF Warning
TimeDec 24, 2022
UK House Prices Could Fall 20% Amid Volatile Response to Mini-Budget
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Image copyright: In Pictures/Getty Images [via CNBC]
The Facts
Forecasters predict an imminent drop in property value in the UK of 15-20%, as rising interest rates prompted lenders to pull around 1k mortgage deals on Thursday, and expectations continued to grow that millions of households will struggle to afford their mortgage costs.
Around 40% of mortgage offers were withdrawn overall, as commentators reflected that interest rates could peak at 6.1%, more than twice the current 2.25%. The Bank of England (BoE) has been incrementally raising interest rates to tame historically high inflation levels in recent months.
The Spin
Left narrative
The current economic crisis is the result of a broken model of capitalism, whereby ultra-low interest rates were relied upon to compensate for the anemic growth under austerity politics. Truss and Kwarteng have blindly pursued a Thatcherite economic agenda that has ruined a system already made fragile by deindustrialization, privatization, and, fundamentally, more than four decades of class war.
Right narrative
The government is facing criticism for failing to explain how it will balance the books — something that will be put out in a medium-term strategy statement in November. There is no feasible way to detail this plan earlier as it will depend on too many currently unknown variables. Although the markets may not like uncertainty in the short-term, Truss is right to stand by her tax-cut and growth plan and look forward to a fiscal consolidation program in two months' time.
