Tuesday, November 25, 2008

Burning Our Money

I happened to be at Westminster during the Chancellor's pre-budget speech yesterday and caught the train home to Thanet from Victoria, feeling somewhat poorer in anticipation of harsher taxes yet to come.

There's a 'Blog' I recommend reading on the subject called 'They're Burning Our Money' and it does a much better job of explaining what happened yesterday than I could possibly even try.

Should you, good reader, still have any doubts over the financial mess that surrounds us, then I suggest a quick visit to HM Treasury's website and a concentrated browse of the 'Crosby Report.'

The Crosby report into mortgage financing, named after its author the former HBOS chief Sir James Crosby, said repayments and redemptions will outpace lending in 2009 as the slump in the housing market deepens.

In his report for the Government, Sir James said that, in the current economic climate, it would be hard for banks to finance loans. Well we know that but here's the stark warning to the Chancellor:

"Therefore I believe that new net mortgage lending is likely to fall below zero in 2009, with only a modest recovery likely in 2010."

In other words there may be 'No' mortgage lending next year by financial institutions or in plain English, there's a risk of the wheels coming off the property-driven economy in which we live.

Whether a two and a half point decrease in the rate of VAT is enough to bump-start an economy that has four flat tyres is another question altogether!

Meanwhile, Westwood Cross was busy this morning, which may be a good sign of returning consumer confidence or perhaps people are spending all they have left before Government asks them for it back again with interest?

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