Jump to content
House Price Crash Forum
North London Rent Girl

Radio 4 PM - savings/income ratio fallen to historic low

Recommended Posts

They discussed the inflation report today on PM, standard meh nothing really but praps worth a mention here - starts at 15 mins 50 seconds in. BoE has had to adjust its growth forecast because "the consumer kept on spending" post brexit when they hadn't thought they would. The savings to income ratio has fallen to a historic low - I found this, which suggests this means further than the 50s, or might the beeb have got that wrong? Seems very drastic.

http://www.tradingeconomics.com/united-kingdom/personal-savings

PM said that the bank wasn't raising a red flag about the lack of saving, more an "amber warning" - a shock to us all that they don't give a monkey's about this, right?

The good news was that they said the bank was sounding "more bearish on IRs". Could we see the heady heights of 0.5% some time soon? :o

Also, Carney was doom-mongering about Brexit again - heard it separately. I have very mixed feelings about Brexit but, for god's sake, we are where we are, he really needs to stop predicting economic armageddon. People like him can't tolerate being wrong and he's in charge of the bank of england, for god's sake - he'd sink us all before admitting a mistake. They need to fire him. I know it's been said on here before a hundred times but, for god's sake, THEY HAVE GOT TO FIRE HIM!!!!

Share this post


Link to post
Share on other sites
21 minutes ago, North London Rent Girl said:

They discussed the inflation report today on PM, standard meh nothing really but praps worth a mention here - starts at 15 mins 50 seconds in. BoE has had to adjust its growth forecast because "the consumer kept on spending" post brexit when they hadn't thought they would. The savings to income ratio has fallen to a historic low - I found this, which suggests this means further than the 50s, or might the beeb have got that wrong? Seems very drastic.

http://www.tradingeconomics.com/united-kingdom/personal-savings

PM said that the bank wasn't raising a red flag about the lack of saving, more an "amber warning" - a shock to us all that they don't give a monkey's about this, right?

The good news was that they said the bank was sounding "more bearish on IRs". Could we see the heady heights of 0.5% some time soon? :o

Also, Carney was doom-mongering about Brexit again - heard it separately. I have very mixed feelings about Brexit but, for god's sake, we are where we are, he really needs to stop predicting economic armageddon. People like him can't tolerate being wrong and he's in charge of the bank of england, for god's sake - he'd sink us all before admitting a mistake. They need to fire him. I know it's been said on here before a hundred times but, for god's sake, THEY HAVE GOT TO FIRE HIM!!!!

He has to keep predicting armageddon to stop journalists asking awkward questions i.e. Why does the UK still need emergency interest rates almost a decade on from the GFC, when the economy's grown without interruption for sixteen consecutive quarters and we enjoy more-or-less full employment?

 

 

Share this post


Link to post
Share on other sites

Lol, they think people having less money and borrowing more is a good thing because they spend more.

Obviously if employees need to be paid more to repay all that debt, employers will gladly hand out pay rises.

Share this post


Link to post
Share on other sites
2 hours ago, North London Rent Girl said:

Also, Carney was doom-mongering about Brexit again - heard it separately. I have very mixed feelings about Brexit but, for god's sake, we are where we are, he really needs to stop predicting economic armageddon. People like him can't tolerate being wrong and he's in charge of the bank of england, for god's sake - he'd sink us all before admitting a mistake. They need to fire him. I know it's been said on here before a hundred times but, for god's sake, THEY HAVE GOT TO FIRE HIM!!!!

Carney is in the fortunate position that he can just alter his forward guidance,safe in the knowledge that everyone will ignore how wrong he was..................again!

Share this post


Link to post
Share on other sites
1 hour ago, zugzwang said:

He has to keep predicting armageddon to stop journalists asking awkward questions i.e. Why does the UK still need emergency interest rates almost a decade on from the GFC, when the economy's grown without interruption for sixteen consecutive quarters and we enjoy more-or-less full employment?

 

 

It also stops anyone asking salient questions about how/why any measure of house price inflation is kept out of the the various inflation measures they use

Share this post


Link to post
Share on other sites
1 hour ago, zugzwang said:

He has to keep predicting armageddon to stop journalists asking awkward questions i.e. Why does the UK still need emergency interest rates almost a decade on from the GFC, when the economy's grown without interruption for sixteen consecutive quarters and we enjoy more-or-less full employment?

 

 

But YOU keep telling us there's a recession imminent and has been since the birth of Christ the Redeemer.

Make your mind up 

Share this post


Link to post
Share on other sites
2 hours ago, North London Rent Girl said:

BoE has had to adjust its growth forecast because "the consumer kept on spending" post brexit when they hadn't thought they would

Reminds me of a tweet I saw earlier today...

 

 

 

Share this post


Link to post
Share on other sites

https://notayesmanseconomics.wordpress.com/2017/02/01/how-many-more-times-can-the-bank-of-england-pump-up-the-housing-market/

Worth noting the constant slating Carney gets from one of the politest people in economics,Shaun Richards...

 

 

'This morning the Monetary Policy Committee meets to make its policy decision although of course us plebs and mere mortals are not told until 12pm tomorrow. What could go wrong from this “improvement”. However what we have is an extraordinarily lax monetary policy driven by yet more forecasting errors by the Bank of England. In a post EU Leave vote panic it cut the official Bank Rate to 0.25% ( so below what Governor Mark Carney had told us was the 0.5% lower bound for it) announced £60 billion of extra UK Gilt buying QE and of course some £10 billion of Corporate Bond QE. The latter was particularly problematic as you see UK companies are often international and thereby issue in Euros and US Dollars meaning that as I pointed out at the time the Bank of England would be a big fish in a small pond. So it bent its criteria.

For example, a company headquartered outside of the UK but employing hundreds of people in the UK and generating sales of £20m in the UK would be considered to make a material contribution to the UK economy.

All of these moves were house price favourable but there was another subsidy provided for the banks that as ever was badged as being for small business lending but was in fact likely to find its way into the housing market. This is the Term Funding Scheme.

The Term Funding Scheme (TFS) is designed to reinforce the transmission of Bank Rate cuts to those interest rates actually faced by households and businesses by providing term funding to banks at rates close to Bank Rate

So far it has provided some £31.37 billion of cheap funding to UK banks, which no doubt will in a “surprise” find its way to the housing market.

Can foreign buyers rescue it one more time? I am not so sure as I have pointed out before although the fact that Bitcoin has been rallying again ( US $977 as I type this) means that money is back flowing out of China. The first time buyer house price to earnings ratio in London has dipped slightly but to a rather extraordinary 10.1. The number for the whole country at 5.3 is just below the all time high of 5.4 which came of course just before the credit crunch hit. '

Edited by Sancho Panza

Share this post


Link to post
Share on other sites
2 hours ago, zugzwang said:

Why does the UK still need emergency interest rates almost a decade on from the GFC, when the economy's grown without interruption for sixteen consecutive quarters and we enjoy more-or-less full employment?

Wage suppression. Motors are a good example as cheap credit means leasing is 'affordable/viable', if this option disappears so will new car sales.

Share this post


Link to post
Share on other sites
1 hour ago, Little Frank said:

But YOU keep telling us there's a recession imminent and has been since the birth of Christ the Redeemer.

Make your mind up 

I haven't changed my mind! The central bankers have managed to keep the shit show together longer than I ever imagined but the fundamentals are still the same as 2005.

Carney's reluctance to raise the Bank rate is due to the UK's chronic indebtedness not uncertainty about Brexit.

As for those record employment numbers? ZHC/part-time work. Me-too franchises. Concrete pouring.

Nothing productive.

uk-real-terms-wage-growth-real-wage-grow

 

Edited by zugzwang

Share this post


Link to post
Share on other sites

Judging from my personal local skip and loft conversion index, there is a real boom taking hold in my corner of SE England (40 miles from London), which can only be driven by the ultra low interest rates. It has accelerated since Carney dropped the interest rate back in June. The UK economy generally follows the US trend rather than the rest of the EU, with perhaps a 1 years lag, so we are overdue a rate rise. The longer Carney bottles it, the more drastic the adjustment will have to be when it happens.

Share this post


Link to post
Share on other sites
7 minutes ago, Sajid the Taxmeister said:

The increase in creating extra bedrooms is a very direct result of low transactions, due to silly prices and unrealistic Stamp Duty.

I think the same thing.

I need to research on how to do loft conversions, the paper work.   

Share this post


Link to post
Share on other sites
13 hours ago, North London Rent Girl said:

The savings to income ratio has fallen to a historic low - I found this, which suggests this means further than the 50s, or might the beeb have got that wrong? Seems very drastic.

A savings rate of 5% isn't going to pay for much of a future income. More and more people are having to be responsible for their own savings rather than their employers doing it for them (DB pension).

Wages are not sufficient to cover education, house and pension in a lifetime.  This situation can't last forever.  How long, no idea. It just looks like more and more promises (debt) are being made than can never be fulfilled.

I worked out my savings to income ratio needed to be at least 50% for a decent retirement since I have no DB pension.  I've managed to do 65% for the last few years and am looking to increase it to 70%.

Share this post


Link to post
Share on other sites

They don't want your savings, they want your debt......They want people to buy assets with growing debt, rent cars, homes, or anything else that brings a constant flow of cash monthly, in one hand, out the other into the hands of another... purchasing stock/shares as investment not saving cash .......Who in a growing inflation, QE, low interest rate and stagnant wages era would want to save?....Losing money daily, value being erroded from the moment it is earned.....Provide the policies get the behaviours.....;)

Share this post


Link to post
Share on other sites
9 hours ago, zugzwang said:

I haven't changed my mind! The central bankers have managed to keep the shit show together longer than I ever imagined but the fundamentals are still the same as 2005.

Carney's reluctance to raise the Bank rate is due to the UK's chronic indebtedness not uncertainty about Brexit.

As for those record employment numbers? ZHC/part-time work. Me-too franchises. Concrete pouring.

Nothing productive.

uk-real-terms-wage-growth-real-wage-grow

 

UK real wage growth is likely to turn negative again thanks to the rising inflation. Positive growth since 2015 was just a result of energy price drop. 

Anyway it is just a meaningless number if the inflation does not include the housing cost, which is a significant chunk of monthly outgoings for most people.  

Share this post


Link to post
Share on other sites

I thought that houses had recently been added to the inflation index (one of them). I took this as an indication that nominals were expected to be heading down from here - did I dream it all?!

Share this post


Link to post
Share on other sites

there was someone on BBC R4 this morning at around 8am ish...about housing supply and distribution of housing...I missed it...anyone catch it??

Share this post


Link to post
Share on other sites

NPower hiking electricity prices by a monstrous 15%.

Awooga!!

http://www.bbc.co.uk/news/business-38852517

Quote

Npower has announced one of the largest single price rises ever implemented by a "Big Six" supplier.

The company will raise standard tariff electricity prices by 15% from 16 March, and gas prices by 4.8%.

A typical dual fuel annual energy bill will rise by an average of 9.8%, or £109.

Npower said the changes would affect about half of its customers, as the other half are on fixed term deals. They will see no price rise.

However, 1.4 million customers on existing standard tariffs will be offered a four year-fixed price tariff with a 4.8% discount.

The announcement comes after three other suppliers - British Gas, E.on and SSE - announced they would keep prices on hold until the end of March.

 

Share this post


Link to post
Share on other sites
10 hours ago, Sajid the Taxmeister said:

The increase in creating extra bedrooms is a very direct result of low transactions, due to silly prices and unrealistic Stamp Duty.

This.

I've a colleague who is starting a conversion on her 3 bed semi in south London, this month. Adding extra bedroom, extending kitchen and dining room area, brickwork, rebuilding garage etc. Big task, and costing her £110K all in. She's extending the mortgage to pay for most of it. Why ? Tells me that she cannot afford to move up to the next rung on the ladder. Has waited 5 yrs but needs the space. Anyway, she tells me it's money well spent as she get it back the day she comes to sell.  We'll see how that works out........

Share this post


Link to post
Share on other sites

https://notayesmanseconomics.wordpress.com/2017/02/03/the-forward-misguidance-of-mark-carney-and-the-bank-of-england-continues/

'Mark Carney tries to take the credit for this

Perhaps the worst part of yesterday’s Inflation Report was the bit where Mark Carney tried to take the credit for the performance of the UK economy.

In part this reflects Bank of England policy actions, which have also helped lower the impact of uncertainty on activity.

He omitted to point out his own doom laden pronouncements which would hardly have helped uncertainty and he had another go at that yesterday.

This stronger projection doesn’t mean the referendum is without consequence………More broadly, the level of GDP is still expected to be 1½% lower in two years’ time than projected in May, despite the substantial easing of monetary, macroprudential and fiscal policies.

If we return to Governor Carney’s claims we see that we had a “bazooka” from a lower pound compared to a “pea shooter” from his Bank Rate cut as I pointed out on Moneybox. Indeed the Governor got himself into something of a mess at the press conference as he tried to take some of the credit for consumer resilience (debt fuelled growth) and then denied that there was much debt fuelled growth! So let us leave him in his own land of confusion.

 

Inflation

Another problem is brewing here and this is in addition to the fact that it is going “higher and higher”. This from the Bank of England yesterday was simply wrong.

Beyond that, inflation is expected to increase further, peaking around 2.8% at the start of 2018, before falling gradually back to 2.4% in three years’ time.

As I have written many times on here that is too low as I expect it to rise above 3% due to the impact of the lower UK Pound £ and the higher price of crude oil. I recall Kristin Forbes of the Bank of England saying that she thought inflation would be pushed some 1.75% higher but now she seems to have done something of a U-Turn and decided it will be more like 0.75%. As the UK Pound £ has fallen further in the meantime that is quite a big change.'

Share this post


Link to post
Share on other sites
4 hours ago, Agentimmo said:

This.

I've a colleague who is starting a conversion on her 3 bed semi in south London, this month. Adding extra bedroom, extending kitchen and dining room area, brickwork, rebuilding garage etc. Big task, and costing her £110K all in. She's extending the mortgage to pay for most of it. Why ? Tells me that she cannot afford to move up to the next rung on the ladder. Has waited 5 yrs but needs the space. Anyway, she tells me it's money well spent as she get it back the day she comes to sell.  We'll see how that works out........

 

 

 

Share this post


Link to post
Share on other sites

YouTube mobile has an ad I've never seen for some savings product that has appeared within the past few days.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   92 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.