Interest Rates

Yep, those with mortgages will see an immediate increase, whilst savings rates will be "under review".

I'm no economist, but I can't see this helping much?
I can understand that raising rates is intended to reduce demand, and therefore prices should come down.

But the current situation is due to supply (or reduction in supply) rather than demand , so raising the rates surely isn't going to help much. The announced capping of gas and electricity costs seems more likely to work?
 
Dave62 said:
Yep, those with mortgages will see an immediate increase, whilst savings rates will be "under review".

I'm no economist, but I can't see this helping much?
I can understand that raising rates is intended to reduce demand, and therefore prices should come down.

But the current situation is due to supply (or reduction in supply) rather than demand , so raising the rates surely isn't going to help much. The announced capping of gas and electricity costs seems more likely to work?
Click to expand...
I agree. We had a thread on this very topic a few weeks ago and that’s what most people seemed to think.

And tomorrow we can expect a “mini budget” a major part of which will be about tax cuts (ie putting more money in the hands of consumers paid for by increased borrowing) on the basis that’ll increase demand and kick start the economy.

Now I know the Bank of England is independent of the government but aren’t those two policies contradictory? One designed to take money out and reduce demand and the other to put money into the system and increase demand?

Seems bonkers to me.
 
Mexboroseasider said:
I agree. We had a thread on this very topic a few weeks ago and that’s what most people seemed to think.

And tomorrow we can expect a “mini budget” a major part of which will be about tax cuts (ie putting more money in the hands of consumers paid for by increased borrowing) on the basis that’ll increase demand and kick start the economy.

Now I know the Bank of England is independent of the government but aren’t those two policies contradictory? One designed to take money out and reduce demand and the other to put money into the system and increase demand?

Seems bonkers to me.
Click to expand...
They are polar opposite policies that make no sense at all and will likely cancel each other out
 
Mexboroseasider said:
I agree. We had a thread on this very topic a few weeks ago and that’s what most people seemed to think.

And tomorrow we can expect a “mini budget” a major part of which will be about tax cuts (ie putting more money in the hands of consumers paid for by increased borrowing) on the basis that’ll increase demand and kick start the economy.

Now I know the Bank of England is independent of the government but aren’t those two policies contradictory? One designed to take money out and reduce demand and the other to put money into the system and increase demand?

Seems bonkers to me.
Click to expand...

Welcome to Trussonomics.
 
Rotterdam+Sussex_Seasider said:
I feel like Lord Smug of Smugshire. My current fixed rate deal ends in January. I fixed it for a further 3 years last week, which was the earliest date!
Click to expand...
We have just fixed for 5 yrs as ours was running out next month,we only moved last October and the mortgage as already gone up £180 a month since then,due to interest rates🤬
 
Mexboroseasider said:
Sounds as if Jezza was right and there is a Magic Money Tree after all.
Click to expand...
Can you imagine Jezza being in charge at the min? The veinbulgers would be in an apoplectic rage at the state of the economy.The press would have a brutal field day but he isn't so the blame lays with covid, war and a ship getting stuck in a canal. (Definitely not brexit...)
 
Shandypants said:
Can you imagine Jezza being in charge at the min? The veinbulgers would be in an apoplectic rage at the state of the economy.The press would have a brutal field day but he isn't so the blame lays with covid, war and a ship getting stuck in a canal. (Definitely not brexit...)
Click to expand...
I expect the new culprit will be the Bank of England.

Interesting view from the FT.

Subscribe to read | Financial Times

News, analysis and comment from the Financial Times, the worldʼs leading global business publication
www.ft.com www.ft.com
 
Mexboroseasider said:
I agree. We had a thread on this very topic a few weeks ago and that’s what most people seemed to think.

And tomorrow we can expect a “mini budget” a major part of which will be about tax cuts (ie putting more money in the hands of consumers paid for by increased borrowing) on the basis that’ll increase demand and kick start the economy.

Now I know the Bank of England is independent of the government but aren’t those two policies contradictory? One designed to take money out and reduce demand and the other to put money into the system and increase demand?

Seems bonkers to me.
Click to expand...
What tax cuts do is to benefit the well-off more than the less well-off, it being a reverse of the progressive nature of income tax. But it's not only income tax - corporation tax is expected to reduce further, benefitting the corporates primarily. A reduction in VAT will benefit the less well-off more because they spend proportionately more of their income.

However, it's a double-edged sword. Leaving the Treasury with less resources means cuts in public spending. That is unless the tax cuts are paid for by borrowing and that is precisely what is intended. Borrowing to pump-prime capital investment makes fiscal sense. Borrowing to back-fill day-to-day spending is madness. That's the sort of thing that the Tories lambasted Labour for - even though Labour don't do that sort of thing. Welcome to the Alice in Wonderland world of Trussonomics.
 
Dave62 said:
Yep, those with mortgages will see an immediate increase, whilst savings rates will be "under review".

I'm no economist, but I can't see this helping much?
I can understand that raising rates is intended to reduce demand, and therefore prices should come down.

But the current situation is due to supply (or reduction in supply) rather than demand , so raising the rates surely isn't going to help much. The announced capping of gas and electricity costs seems more likely to work?
Click to expand...
Its to reduce demand, and inflation, but other policies are at total odds, trying to increase spend by tax cuts.

No strategic sense, just short term bribes hoping we'll have a collective memory loss come 2024 and vote for them.

Polls showing 31% for Truss as PM, Starmer 42%
 
Wizaard said:
Its to reduce demand, and inflation, but other policies are at total odds, trying to increase spend by tax cuts.

No strategic sense, just short term bribes hoping we'll have a collective memory loss come 2024 and vote for them.

Polls showing 31% for Truss as PM, Starmer 42%
Click to expand...
The government are not allowing the OBR to analyse and predict the impact of the changes that they want to make, that tells its own story. If they are confident in their approach why are they evading the normal scrutiny and controls?
It really stinks, looks like short termism, smells like short termism. We will all be paying for this in the long term.
 
ElBurroSinNombre said:
The government are not allowing the OBR to analyse and predict the impact of the changes that they want to make, that tells its own story. If they are confident in their approach why are they evading the normal scrutiny and controls?
It really stinks, looks like short termism, smells like short termism. We will all be paying for this in the long term.
Click to expand...
Luckily, Liz has her directorships lined up with the big energy companies and bonuses with the banks for when she is hammered at the next election. Good to have a fallback.
 
Nobody likes being taxed but as somebody much smarter than me once said- taxes are the price of civilisation.
We agreed the increase in NI was to help improve social care and tackle covid backlog in the nhs
The reversal will mean that there is £50 billion gone and have I got it right we are borrowing ( as interest rates rise) to fund tax cuts

As somebody above said if this was a Labour government the right wing press would be apoplectic.

Who the fk is going to pick up the bill ??
 
Bisphamtang said:
Nobody likes being taxed but as somebody much smarter than me once said- taxes are the price of civilisation.
We agreed the increase in NI was to help improve social care and tackle covid backlog in the nhs
The reversal will mean that there is £50 billion gone and have I got it right we are borrowing ( as interest rates rise) to fund tax cuts

As somebody above said if this was a Labour government the right wing press would be apoplectic.

Who the fk is going to pick up the bill ??
Click to expand...
Top rate of tax abolished. Like it or not, it's a radical plan for growth.
 
seems to be a series of policies specifically design to push up housing prices, specifically so that funds, and the very wealthy can acquire/ extend income generating property portfolios..

interest rates have been held artificially low for decades in order to fuel property booms and support the financial sector, as well as "stimulate" growth, but it hasnt really worked. All it has ever done is push asset values up. higher interest rates are really going to affect those whose property acquisition is simply acquiring a home.

the stamp duty on first time buyers at 450k, which first time buyers have the salary for a first time purchase at that level.

expect a big increase in property prices, and more shenanigans form the banks to make mortgages just about payable.

wouldnt surprsie me if there is someone predicting a fairly steep markets crash, so are looking to bump up another asset class as security.
 
Costero Poderoso said:
seems to be a series of policies specifically design to push up housing prices, specifically so that funds, and the very wealthy can acquire/ extend income generating property portfolios..

interest rates have been held artificially low for decades in order to fuel property booms and support the financial sector, as well as "stimulate" growth, but it hasnt really worked. All it has ever done is push asset values up. higher interest rates are really going to affect those whose property acquisition is simply acquiring a home.

the stamp duty on first time buyers at 450k, which first time buyers have the salary for a first time purchase at that level.

expect a big increase in property prices, and more shenanigans form the banks to make mortgages just about payable.

wouldnt surprsie me if there is someone predicting a fairly steep markets crash, so are looking to bump up another asset class as security.
Click to expand...
Surely the cut in stamp duty just puts money into the pockets of the vendors, they will take whatever is on the table when supply is short.
However, with interest rates rising, won't this counteract the SD tax cuts? - the amount that you can borrow is decreasing with every passing month.
 
ElBurroSinNombre said:
Surely the cut in stamp duty just puts money into the pockets of the vendors, they will take whatever is on the table when supply is short.
However, with interest rates rising, won't this counteract the SD tax cuts? - the amount that you can borrow is decreasing with every passing month.
Click to expand...
The economics of idiots.
 
Mexboroseasider said:
Sterling isn’t reacting well to the budget.
Click to expand...
Markets dropping as well.
It's not a budget anyway but a 'fiscal event' - this is how the government avoided the scrutiny of the Office for Budget Responsibility as budgets are required to be reviewed and results of review published by law.
 
It feels all a bit bonkers to be honest. I'm reminded of Roman Emperors putting on a Games.

Is it the great 'feel good - spend more' gamble of the century. They are telling us we are all going to be better off, so we spend more, rather than what every single person I know is doing, which is basically spending as little as possible 'just in case' and I just can't see it working.

Personally, I think they should have done a few things.

Raise the thresholds of the lower and middle tax brackets.
and possibly remove the NI increase.

And think how do we get more money at the bottom of the pyramid who will spend it, rather than top, who will hoard it.

What it has done is nailed a political philosophy to the mast; there is no doubt what the Conservatives are - lower taxation, deregulation with higher borrowing to fund it.

I wonder how the EU will feel when we start to become a national 'freeport' - Christ I wonder how I'm going to feel!

WRT interest rates; I locked in to a 1.59% for 5 years, last summer; so I'm sheltered for a while yet; hopefully as the LTV will be much lower at the end of the 5 years, I'll be still able to get a decent deal.
 
Last edited:
If it all comes off as planned Tories win the next GE comfortably.Should be an interesting 2 years.🧐
 
Last edited:
ElBurroSinNombre said:
Surely the cut in stamp duty just puts money into the pockets of the vendors, they will take whatever is on the table when supply is short.
However, with interest rates rising, won't this counteract the SD tax cuts? - the amount that you can borrow is decreasing with every passing month.
Click to expand...
So those with ready cash and / or equity will be in positions to buy. Even more housing stock moves to corporate or large fund ownership which in turn creates a market shortage for people who want homes. Once property is in the hands of funds it very rarely returns to general ownership.
 
The only thing that comes down in this country is the rain.
So pleased that a mortgage is a thing from the past. (£48 a month was a struggle ) 😀
 
Trammo said:
If it all comes off as planned Tories win the next GE comfortably.Should be an interesting 2 years.🧐
Click to expand...
The problem is, old bean, even the Chancellor is aware it is a long term fix. I have seen predictions of interest rates rising to 5% by the end of 2023, that will fxxx the economy even further as loans for capital investment become more expensive, no further productivity gains.

I know you Tory's are always preaching about the market, so the pound down and stock market falling shows you what they think of this tax funded giveaway. It is the political equivalent of slash and burn.

31% for Truss, who on earth were they polling?
 
Tangerinemoss said:
The problem is, old bean, even the Chancellor is aware it is a long term fix. I have seen predictions of interest rates rising to 5% by the end of 2023, that will fxxx the economy even further as loans for capital investment become more expensive, no further productivity gains.

I know you Tory's are always preaching about the market, so the pound down and stock market falling shows you what they think of this tax funded giveaway. It is the political equivalent of slash and burn.

31% for Truss, who on earth were they polling?
Click to expand...
It's what Sunak said during the hustings;
'If we Conservatives are not for sound money then what are we for?'

The answer to that question would seem to be letting the already rich get their snouts in the trough whilst many other people are really struggling.
 
Sunak didn't want to gamble on the economy and as a Conservative with a small c he wanted sound finances and knew trickle down economics was wrong headed and socially unjust

Members of the Conservative Party boted for a neo liberal approach on the economy

Still surprised to see posters doffing their caps but nothing new

Does anybody on here believe the economy is in good hands ?
 
Last edited:
Interest rates that slow the economy to curb inflation, and tax cuts for the very rich to boost consumer spending. Stamp duty that benefits the large
corporations that are buying housing stock, where there is already a short supply in the market. The thing I struggled with was the chancellor saying it will encourage the really well-off to work harder, I just can't imagine premier league footballers' work rate improving, or high-earning showbiz stars suddenly working harder.

If inflation is the enemy why not tackle our overpriced petrol and diesel, we are free from the constraints of the European Vat system.
cut the Vat, and fuel duty so that prices fall by 10%. Make sure that there is legislation in place to reduce prices at the pumps, and threaten the large fuel companies with large fines if they fail to pass the tax savings on to the consumer.
 
Danny Ocean said:
Interest rates that slow the economy to curb inflation, and tax cuts for the very rich to boost consumer spending. Stamp duty that benefits the large
corporations that are buying housing stock, where there is already a short supply in the market. The thing I struggled with was the chancellor saying it will encourage the really well-off to work harder, I just can't imagine premier league footballers' work rate improving, or high-earning showbiz stars suddenly working harder.

If inflation is the enemy why not tackle our overpriced petrol and diesel, we are free from the constraints of the European Vat system.
cut the Vat, and fuel duty so that prices fall by 10%. Make sure that there is legislation in place to reduce prices at the pumps, and threaten the large fuel companies with large fines if they fail to pass the tax savings on to the consumer.
Click to expand...
Or even a windfall tax on the big producers.
 
You must log in or register to reply here.
Back
Top