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The Business: Uk Policy Chasm: Official Numbers And The Real World.

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'UK policy chasm: official numbers and the real world':


Slowly but surely, the pressure is growing for a cut in UK interest rates. Whatever the official figures may say about inflation and growth, there is no greater disconnect today than that between the everyday experience of households and what the official numbers are saying about the state of the UK economy.


For the moment, only a small minority on the Bank of England's Monetary Policy Committee have questioned the Bank's sanguine forecasts of a steady acceleration in economic growth. Indeed, the minutes of the last MPC meeting, due to be released next week, are likely to show a vote of seven to two in favour of keeping rates unchanged.

The question is not whether this majority against cutting will crumble, but how long it will take.


...there is understandable concern within the MPC at the signs of renewed buoyancy in the housing market. For the third month in a row, more estate agents reported higher prices in the past three months than lower prices, the eighth month in a row that the prices balance has improved. Mortgage approvals rose to 122,000 in December, the highest since May 2004, and over the fourth quarter showed a rise of 12% on the preceding three months. Modelling by Lombard Street Research suggests the annual rate of house price inflation could be back at 10% by the end of the year. Having worked to defuse the house price bubble over 2004-05, the MPC will be reluctant to throw away that achievement.


Much now depends on a pick-up in retail sales and consumer spending this month and next to justify the maintenance of a "no change" stance on interest rates. In the world of official statistics, there is no reason to change. But in the world of mere mortals, households have a different reality to contend with. It's called the cost of living and it's something quite different from the rate of inflation.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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