When you lie on your CV you tend to get caught out eventually. Ironically, it’s estate agents that are the most lambasted in society for exaggerating, embellishing and twisting the truth yet His Majesty’s Treasury is now fronted by a dodgy Chancellor that by comparison makes Walter Mitty look like a Quaker pumped full of truth serum.
Rachel Reeves’ first six months in the job, her probationary period if you like, has not been great and epitomises her lack of experience in the real world and demonstrates that ideology is not a viable replacement for the realities of behavioural economics. In other words, her Budget was somewhat ‘Truss like’ in its effect on the financial markets and for public sentiment.
Who knew that increasing taxes by £40billion, half of which was forced upon employers, would have the effect of scaring the horses?
If Reeves was employed in the private sector she would have been marched out of the building with her abacus and her copy of Das Kapital under one arm, weeks ago.
However, even though she has become whatever the opposite of Midas was, yesterday revealed a slivver of optimism that will now play well for the property sector in that the latest inflation figures (for December) were slightly more positive than the City expected, coming in at 2.5% versus the previous 2.6%. So, down only a tad but down nonetheless. And of course, all rather by accident rather than by politician’s design.
There are a number of reasons why this decline in inflation rate growth is important to us and not just because it has probably saved Reeves from her remaining tenure being compared to the shelf life of a salad.
This small drop in the inflation rate is a reversal of the October and November upward trend versus the falling trend of the previous government and therefore the narrative now will be less ‘inflation is increasing’ under Labour. That surely was NOT the type of growth that Reeves and Starmer presumably had in mind.
In two weeks’ time the Bank of England’s Monetary Policy Committee will sit to decide on the UK borrowing rate. Until yesterday it was highly doubtful that they would cut to 4.5% from the current 4.75% but now they might. If the Bank rate were to reduce for this, a third time since the summer, it will send a very enthusing signal to borrowers, businesses, home buyers and the markets.
But the true test of how healthy the economy is looking is by way of those financial markets and their reactions to fiscal policy. In recent weeks they have looked upon the UK economy as less favourable than a bin-fire but… in the last 24 hours since the inflation numbers landed, the FTSE index of 100 leading shares and the FTSE 250 have gone up by 1.2% and 2.9% respectively. The pound increased in value against the dollar from a prior big slump in value and Gilt yields, the measure of the government’s borrowing ability, reduced from last week’s 20 year high. It is Gilt yields that determine fixed mortgage rates and so this is a key metric for our sector.
Rachel Reeves may just have stumbled across an unexpected Get Out Of Jail Free card, one that when she’s finished with it she can perhaps pass on to some of her Labour colleagues that may actually need one for real, given the growing number of current political scandals. But dodged a 50 calibre bullet she may well have done.
It’s incredible, in spite of our politicians and their questionable competence, City traders taking advantage of such, an unaccountable Bank of England plus world events that throw curve balls, that the UK property market is so, so resilient.
Why so? Because consumers in the form of home buyers and sellers, entrepreneurs and business owners in the form of estate agency and mortgage lending players, are scrappy, innovative and bold people that hustle and strive and make the best of things regardless.
It seems that we survive and prosper, not because of government. But despite it.
2025 is going to be ok. Rachel’s credibility? Not so much.
Russell Quirk is the opinionated co-founder of ProperPR, the property public relations agency
Read the orginal article: https://propertyindustryeye.com/opinion-rachel-reeves-salad-dodger/
