In 2008, the world global banking system went into meltdown after the bankruptcy of Lehman Brothers. It stemmed from a toxic combination of falling house prices, rising interest rates and sub-prime mortgage debt. To relive the 2008 Credit Crunch – see this article on Credit Crunch Explained (which was one of my earlier articles as …
Last week, the Nationwide reported a sixth consecutive monthly fall in house prices. They are now 6% down on last summer’s peak with buyers able to get an average £14,000 off the asking price. Annual price changes are falling at the fastest rate since 2012. Yet, some analysts wonder if the worst is already over? …
UK bond yields are the rate of interest received by those holding Government bonds. Governments sell bonds (also called gilts) via the Debt Management Office to fund their budget deficits. Bonds are a way for the government to borrow – a bit like the government taking out a loan. Government bonds are frequently traded on …
Research shows that historical interest rates have been consistently falling, ever since the first interest rates could be measured in the medieval ages. Although there are cyclical fluctuations, there is a consistent long-term trend for real interest rates to fall at a steady rate. The interesting thing is that this phenomenon has been noticed in …
On Friday 23 September Kwasi Kwarteng the new chancellor introduced a set of tax cuts and energy price guarantees in a measure the treasury described as a ‘fiscal event.’ Yet even as he was reading out his series of unprecedented tax cuts (as share of GDP, 2nd biggest on record), markets took fright, causing the …
As the chancellor Kwasi Kwarteng was announcing his radical budget of energy bailout, and tax cuts for corporations and high-income earners, the markets took a dim view. Sterling fell and bond yields on government debt rose as investors sold UK bonds in response to the deteriorating outlook. Uniquely for such a large change of …
The UK government faces a perilous situation. In the short-term, there is a combined threat of an energy crisis, high inflation, risk of an imminent recession and a falling value of Sterling. On top of that, there are long-term problems such as climate change, a slowdown in growth and productivity, and rising debt to GDP. …
Politicians often promise tax cuts can lead to higher productivity, higher economic growth, and even pay for themselves through a boost to long-term incomes. These promises may chime with the electorate who tend to prefer promises of tax cuts. But, do tax cuts really increase economic growth? There are two impacts of lower tax. Increasing …