The UK's Inflation Crisis: Will it Bring Down the Housing Market?
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- Опубликовано: 28 май 2024
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With inflation still stubbornly high, the Bank of England is set to hike interest rates further and possibly send the UK into recession. So in this video, we break down the economic and political impact of this, and why it's bad news for Brits and Sunak.
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1 - www.ft.com/content/a33c3b7f-6...
2 - www.ons.gov.uk/employmentandl...
3 - www.ft.com/content/e82b72f5-7...
4 - www.ft.com/content/9940b3b2-1...
5 - www.ft.com/content/ac1808b6-3...
6 - www.gov.uk/government/news/pr...
7 - www.ft.com/content/a11ca42c-a...
00:00 Introduction
00:48 The Latest Data
02:43 The Economic Impacts
05:05 The Political Impacts
fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.
Consider reallocating from real estate to other reliable investments like stock, crypto or precious metals . Severe recessions offer market buying opportunities with caution, as volatility can yield short-term trading prospects. Not financial advice, but it may be wise to invest, as cash isn't ideal in this period.
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Because so many people overpaid for homes even while loan rates were low, I believe there will be a housing catastrophe because these people are in debt. If housing costs continue to drop and, for whatever reason, they can no longer afford the property and it goes into foreclosure, they have no equity since, even if they try to sell, they will not make any money. I believe that many individuals will experience this, especially given the impending mass layoffs and rapidly rising living expenses.
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Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
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Love how the US and UK are breaking all economic assumptions in completely opposite ways
Why don't you move to the US then? You obviously think the grass is so much greener over there.
@@hughjohns9110How did you pick that up? Where is one mentioned better than the other? Why are you over reading?
It’s the effect of being a reserve currency, coupled with US having domestic raw materials such as gas/oil and minerals.
@@theklr I'll respond to the person who wrote it, you are assuming what he meant just as much as I am.
@@mramg6038 so do you meant that the US has natural advantages over the UK which we can do nothing about?
*The comments:*
50% people
50% investment scam bots
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@@trazzpalmer3199 Here it is, the spam.
I wonder if there is a correlation between wages increasing and inflation coming down.
The bottom 80% need more, the top 1% need to cut back
I wonder if there is a correlation between mass migration and housing prices going up. Seems to me that a finite housing supply meeting massively increased demand from migrants would cause an inflationary spiral in the housing market. Moody's did an excellent study on this confirming that in the United States. Obviously the laws of supply and demand pertain to England as well, so no reason it wouldn't also affect England.
@@ninjacats1647 don't speak facts out loud, you might upset the neoliberals pretending to be on the left and the conservative centrists who love cashing in on high rents.
@@ninjacats1647If you think any of the crises we're facing in the UK are actually anything really to do with immigration, then I'm sad to say the Tory lie-mill has worked on at least one person
Sunak has another problem with "halving Inflation"
Polls suggest 60% of voters think "halving Inflation" would mean prices were the same or less than last year, only 23% understand they would still be going up
So say he squeaks in on this, and claims to have achieved it, voters will be disappointed
60% of pepole are dumb as rocks.... this is why democracy struggles so badly
I'd say the fact 60% of voters are really stupid is Richy Sunaks biggest win.
Correct. A lot of people actually believe prices will go back to where they were.
Wait until they realise its a one way 🎟!
@@Carl-tc2ybYup they can't get their head around the Tories have made them poorer. Hopefully remember it next time they vote but the English have short memories
@@drunkengamer1977 The Tories know they are going down.
The issue is, they are taking the country with them, whilst simultaneously dividing our wealth amongst themselves and their friends.
It's been happening for years and people just cannot see it.
I am a homeowner, but I would happily see the housing market go down and people who hoard properties be penalized if it means young people can get on the ladder. Nobody should be allowed to profiteer on housing.
Your assuming that banks will be in a position to lend at all..... a surge in defaults and banks start reigning in on new credit, and voila you've got a full blown downturn.
And if it the property market in Britain falls by the 25% - 30% that some people are predicting, those young people might not even have a job to buy a house....
I'm not saying your wrong, but just be careful what you wish for!
Lmao
@@GavinLawrence747 They have reaped astronomical profits, in all reality they take little risk, was it less than two years ago the government pledged to pay the default on mortgages for the first 30% or so, to increase bank lending leaving the tax payer to foot the bill. The banks withdraw huge capital, create money from nothing which we pay to them in the form of mortgages. They can't loose, & make all the money. The second a few quid stops circulating they then put on the brakes & claim poverty.
I pay £420 per month for a large room. What the housing market does doesn't affect me. I just want free movement back 🇪🇺
One way that was done in Canada was to increase property taxes on housing that wasn't occupied year round (I think it was something like having to be continuously occupied 9 months in 12). This meant it cost more to sit on an empty property or by turning it into an AirBnB.
Maybe.. just maybe cutting off your primary trading partner wasn't the greatest decisions ever made
I despair of my fellow Brits, and tend to describe Brexit as the economic equivalent of blowing your own legs off with a howitzer. That would have been bad enough but Bojo's pathetic initial response to COVID just put the last nail in the coffin. Quite literally, for a quarter of a million people.
But.. but.. they now have all the cards in the hand and are not under the EU-dictatorship 😂
Blue passports!
@@zaphodbeeblebrox2981yes bro, we should all join Russia, let them dictate our laws and economy in exchange for gas and oil.. we can end the energy and food crisis instantly
Like Germany wrecking their economy by making themselves dependent on Russian gas and oil and then.. cutting them off?? Wow, who knew that sometimes liberty and freedom is worth a price..
Missed one major issue here.
The BoE increasing Interest Rates would only cause Inflation to decrease if it was Demand Based Inflation.
The UK is currently experiencing Supply Based Inflation.
This can only be managed and resolved by Government intervention.
So yes, the Govt and Sunak are directly responsible for our current predicament due to complete inaction.
I can see that raising rates can protect the GBP exchange rate, offsetting the risk of rising costs of imports key resources like oil and wheat. So if the USA is raising rates, so does everyone else that is a net importer.
But Oil price as a key driver of inflation peaked 12 months ago and dropped 30% to todays rate c$75 (the same as 2018 levels), so this reduction in cost might take a little while to feed through to the market but surely this inflation is temporary and will reduce in 12-24 months regardless.
If the concern over CPI inflation is the wealthfare of the citizens of the country then Mortgage interest and rents should be included with a heavy weighting. Inflation relating to air travel, recreational, cultural goods, alcohol, even whitegoods - can be avoided by foregoing or reducing quality.
I don't see why my mortgage should increase by £'000s per month to reduce the future price of bread by 20p a loaf for a year or two.
Many people who need to remortgage in the next 12 months are not going to be able to afford it, lives are going to be ruined.
I was gonna say that the phrasing "BoE is responsible for inflation" and "it's not really Sunak's fault" could be misunderstood in isolation as either blaming BoE for inflation or exonerating Sunak, which I'm sure wasn't the intention. Sure, technically BoE could immediately bring inflation under control (cratering the British economy in the process, I assume), and technically BoE controls (a few) parameters that Sunak doesn't have direct control over, mainly the interest rates, but that doesn't mean the underlying causes of inflation are out of the Prime Minister's or Parliament's powerful influence, though charitably we can say they're not under Sunak's control.
So I think the TLDR summary went a bit overboard there. Disclaimer: not British nor an expert.
"You'll own nothing and be happy."
Strange how oil prices are lower than pre-Ukraine. But yes, global inflation is definitely supply-led and completely unrelated to a 40% (USD) increase in money supply post-Covid...
Unfortunately, the inflationary cat is out the bag and putting it back is going to be incredibly painful.
This is Brexit coming home to roost. I can remember telling people back when the referendum was kicking off that the UK is heavily dependent on food imports and the inevitable outcome would be massive inflation in food prices. Well, as the UK is finally disengaging from the single market, that's exactly what happened. And I wasn't even thinking about migrant labour at the time and how heavily dependent British farmers are on it for vegetable and fruit harvesting.
How ignorant are you, do you understand the UK economy at all?
The UK would have been better off if the government, Europe and the States didn't block Ukraine and Russian peace negotiations.
This is an energy and food crisis we face and the UK is/has been for decades in one the worst positions to deal with it.
The fact that you are gleeful at the prospect of people suffering, which you falsely equate with a referendum to leave the EU, is telling of your character.
I agree. It's scary how much brexit has cost us. Should have been another referendum 2 months after the vote...
@@Adam-mo2qwtbh people should have paid attention in schools and understand basic economic rules rather then believing a stupid bus with numbers on it…
@nomnomNACHO I agree. Over 50% of the population wanted it. It's their fault not the governments.
If that’s the case then why EVERY nation undergoing similar? Admittedly uk is slightly worse but only just. Incompetent and corrupt government! Of course die hard remainers will blame brexit. Pathetic!
*Problem is, inflation in the UK* is being caused by supply side shocks, not demand side. Hence the Brexit mention.
Interest rate hikes will barely make a difference.
It is possible to experience inflation within individual markets due to this type of demand but it is not possible to have broad-based inflation in the majority of markets without an expansion of the money supply therefore blaming individual factors such as the Ukraine or Brexit is at once valid to some extent but far from the entire picture without expansion of the money supply there would not be broad-based inflation and to ignore this fact is wilfully ignorant or idea logically based in that people want to rejoin the European Union.
Supply shocks causing inflation?????
@@adrianrouse5148 yep. Excessive demand isn't the problem but supply problems are.
Brexit 😂😂😂 Sure its Brexit so how does that explain the massive recession in Germany pretty sure there was no Brexit for them? The reason is the fact people are still spending money. If people didn't keep buying then the demand would go down thats why the BoE is trying to push us into recession to stop people spending money.
Purposefully created supply issues.
People have gotten so used to low interest rates and low inflation for decades. They'd come to believe it was somehow intrinsic and we lived in a benign capitalist system. I lived through the 80s in the UK. Four million unemployed, with double digit inflation and interest rates, that lasted over a decade. At that time when we were part of the EU, politicians were far more capable and intelligent than the intellectual dregs and criminals now in power. They had much more control of the economic levers of power and were far, far less corrupt than today. We're royally fucked for the foreseeable future. Batten down the hatches people, we're in for hard times and it's going to get a lot worse.
Because there was a crisis in the 80s just like now.
Totally agree
Inflation has nearly crippled me and my uni mates. Our student loans are being stretched thin in order to afford rent, one of my friends and I are having to work around 6 days a week (to ensure we can afford the higher rents for next year). It's causing us a bit of an issue. Even though we aren't home owners, inflation is affecting us harshly and we all have started making plans to move back in with our parents after uni simply cause we aren't likely gonna be able to afford any rents. Fingers crossed that it somewhat gets better over the next year.
The only homeowners are people who have paid off their mortgages in full. Mortgage payers are just paying rent to the shareholders of the banks.
Hahahahaha
so , why are the university rents rising?
if UK doesn't do automatic indexation on wages, it shouldn't higher rent costs now..
living with parents for a couple of years while working, sounds pretty strait forward to me though, that''s in most of western europe the case if you live in a bigger city... just cause of how expensive buying a house has become..
Mate, drop the self pity act, 99% of the people I went to uni with moved back in with their parents (or another shared house situation) after uni. And this was 5 years ago. Starting salaries for graduate positions have always been shit, obviously COS is exacerbating this problem further but your situation isn’t that different from most people when they left uni. I mean, God my student loan was £3k a YEAR and my parents didn’t send me any money, my mum bought me a bag of apples and onions when I moved out and that was basically it as far as I remember. Most of my evenings at uni were spent on my bike doing Deliveroo - for 3 years. You’re still young, my friend EVERYBODY struggles when they’re young, you will see a light at the end of the tunnel in a 5/6 years and all this you’re feeling now will just a blip
@@harryclark7404 bro don't be so pissy about it, you're clearly bothered. And if you're going to complain about student loan payments, at least have them be actually expensive. I paid $5700 last year. Paid for it myself.
heres what will happen .. average joe who works hard wont get a mortgage and all the rich people will hoover up the houses leaving us as a nation of renters other than those who already have one
nah, link mortgage rates to saving rates
@@parametranother absolute shambles if you look at average saving rates they are consistently much lower than interest rates because banks says it takes a month delay to implement. This month delay does not apply to borrowing which creates a spiral of greedflation
A really that is (roughly the prediction, at some point most people will be tenants (renters) because getting on the housing will become extremely.difficult in the UK (I hope I'm wrong though).
Try REIT, obviously can’t beat a rich lad from grabbing this opportunity
@@DansTrailShreds we all know that "1 month delay" is a lie. That's how they are making windfall profit.
And no bank increased the rate... you could say it's profiteering and some anti-competitive shenanigans are going on.
You know. the type of thing a government is meant to protect us from. Unless they are Tory, of course.
Months ago, it was practice (even on the BBC!) to quote private-sector wage rises with AND without the banking sector, when they did that non-banking wage rises were something like 1-1.5% less than the overall figure. Wonder why we stopped doing that...
I can remember when the BBC would quote the trade balance. Understandably, that stopped decades ago.
@@annacomnena217because we can't show the populace how badly the country is doing
It’s really gross how financially tough life has become for regular people. I’m earning a lot more than I was a few years ago but I don’t feel like I’ve become any more well off. It’s almost impossible to save money and even if you do the value of your savings is being destroyed by inflation. It has always been hard to become financially free, but now it seems impossible.
nah it's possible.
Death is the only escape!!.
Sad realities of a major war that disrupts energy and agricultural supplies.
@@mramg6038 I can't see how increasing mortgages/rent are going to reduce the cost of food. Yes, we can reduce the quality of our food, we can reduce the total amount of calories we consume. But is that going to reduce the global price of wheat?
And even if it does work and reduces the future price of a loaf of bread by 20p - that pales in comparison to the many £'000s pa being paid on extra rent/mortgage.
Why on earth does the CPI not include Mortgage interest / rent costs?
Anyone who owns their own home without a mortgage is laughing everone else are screwed.
@@attackxxx If you owned a house before things got shit, yes.
Otherwise, no.
I feel like it's a bit misleading to still be calling it the Housing Market, first thing most people think when they hear it is House prices themselves as opposed to merely the associated renting or mortgage payments. My heart goes out to those affected, I can't help but feel like this is just the tip of the iceberg in terms of our average quality of life collapsing.
As a Belgian i am really surprised how standard flex rates seem to be in the uk! Here most have fixed rates and have to keep paying of the same amount for 20 to 25 years, Belgian newspapers had an article saying the average mortgage in the UK raised with 280 a month! Thats a lot.. but they failed to mention food appearantly keep rising too? Didn't expect that.. here the past 2 months the rise has halted with even a tiny drop in food prices now :-). Feels like can finally re acclimate to the new normal food prices
We will own nothing and be happy, pass the fried cockroaches.
What about housing cost help for renters? It's us who are hardest hit, and in the UK as usual, the discussion is about protecting boomer home owners, not everyone else...
Renting should be illegal, pretty much all economists agree it brings no value & is a parasitic form.
Not all boomers are house owners. Also not all millennials are renters either. We need to be careful for what we wish for....it wasn't easy in 2008 or the 70s/90s. If you want a crapstorm to hit you hard like those era's combined with economic instability in the uk. Then you will be out of work and most likely without a roof over your head.
It’s not helping home owners, this help will benefit moslty under 50s who still have mortgages to pay off
Help! why do you feel entitled to others money? the government is not a bank. it takes tax and distributes it! Your ask for help is therefore a plea to take from others. peoples attitude has vilified landlords which has resulted in populist government fiscal attacks on landlords. Landlords sell and get out of the market leaving fewer properties to reent and so rents go up. Be careful what you wish for I say. there is no magic money tree
@@HShango Disagree, the current system is not working, it is benefiting the few; not the many.
in my view, low priced housing is good for regular people, the only people who will be hurt by cheap housing are rich people and banks.
Rich won’t let go their existing houses(assets), but also grab new ones as they have that kind of money. Normal cannot do much here
The problem isn't cheap housing, it's housing that loses it's value to way below what the owner paid for it - particularly if they have an outstanding mortgage.
@@PaulBurns-cs1xe Blair was never going to stop it, nor were Tories.
I realise why the world is in such a mess when there are comments as ignorant and as ridiculous as this.
@@HShango its a globalist kick the can down the rd technique. it will have some very disasterous consequences in the future
I recently saw news that children raised during the Osborne austerity are smaller in size compared to their European peers. I'm still waiting to see the real benefits and need for that austerity during cheap credit times. Now to curb inflation, rates will climb, investment will probably dwindle, people are getting poorer. This will irreversibly affect the generation growing up now.
Could it be that half of them are asian?
What a load rubish. We are 1.5cm taller than the previous generation but significantly smaller than the Europeans. That is down to 3 factors.
1. Some EU countries on the Previous generation were children of the iron curtain/ Soviet block so they will have grown more vs there parents. (Starting from a lower base of nutrition)
2. British people are historically smaller. We are never going to reach or grow to the heights of the europeans. 😂
3. Mass immigration from nations with malnutrition and smaller starting heights.
Perhaps don't get your news from TikTok 🤣
@@c_n_b it was't tiktok but thanks for assuming ;)
"Ordinary Brits and Prime Minister Rishi Sunak" Love it!
If the cause of inflation is down to largely external factors, and we are not flagrantly spending, hiking rates is not going to have the affect its expected to. And it is not...
On the bright side Sunak and the public are finally sharing a hardship, even if it is for very different reasons.
Hardly. Sunak will inevitably get a cushy job on a stupendous salary for some investment firm or bank or wherever assuming he doesn't just sit on his fortune and appear on Have I Got News For You occasionally.
We live in a world where Tony Blair became a Middle East peace envoy...these idiots never suffer any real consequences for their actions.
Just as a sidenote: Food Prices are normally not included in core inflation calculations, core inflation already tries to sort out strong volatile prices like food and energy.
The Brexit premium. Inflation is due to supply and not demand, so pumping interest rates up won't make a difference to food and fuel. These are staples and need govt policies to fix, not the BOE.
*SUNAK RAISED THE PRICE OF THE TESCO MEAL DEAL!!!*
One loss to the economy is paying 'analysts' who seem to never have any idea what's actually going to happen.
Seems to me the more you have your own energy supplies to better.
Thank you for your reporting TLDR, much appreciated
I remember Rishi Sunak proudly saying when giving away free cash: 'This is the most generous package in the world'. He is fully responsible for this mess!
I don't entirely agree with that assessment, but the Conservative government is to blame for a lot of this mess in other ways. Can't wait for this government to be booted out at the next election.
And yet most of it went to large corporations rather than average people which is probably why we aren't really seeing demand side inflation otherwise these rate hikes would have already reduced inflation much quicker than it is
I remember being a self-employed taxpayer who was entirely excluded from any support whatsoever because I became self-employed a month too late. So I get to pay for the cash I didn't even get.
@@jacobarcher1097trickle down will be the defence
He was giving away money like Tim Cook presents an iPhone launch while the rest of us were working harder than ever keeping the country going during the lockdowns.
Who would have thought printing loads of money would screw up the value of sterling. Well done Sunak.
Not just that, (though I completely agree with you), but it went to certain people in certain areas. So, inflation has risen for everyone, but some of us are in a very bad position to deal with it.
at last a sensible comment from thos above. Congrats. interest rates have been too low for too long and consumer ehaviour has driven costs of everything up because people cant behave responsibly.
@@brandon3872 how on earth is Brown responsible for the global fanatical crisis?
Do you honestly not realize the Banks + deregulation caused it?
@@brandon3872the MBS crisis in America was Brown's fault?
@@brandon3872 It wasnt Gordon Browns economic failure that prevented the UK from recovering from the 2008 crash by killing productivity growth and making everyone poorer for 13 years but trying to hide that fact by artificially inflating house prices. Other countries introduced stimulus with cheap borrowing that boosted their economic growth and allowed them to moter away from the fallout of 2008, where as we slammed on the brakes and sat around in the wreckage getting poorer for over a decade
Price caps on essentials will bring it down, no more profiteering.
If people wait for a house value crash, they'll jump together making prices soar
I know someone who sold his house pre Brexit believing after Brexit house prices would crash and he could buy a bigger house. He’s now stuck in rented accommodation as prices soared. Never listen to experts, they’re clueless. I mean for every expert that says one thing there’s 2 that disagree and say the opposite will happen.
In my humble opinion the only approach to take is to look at the longer term, 10 years plus I’d say. It’s time in the market that counts not trying to time the market.
99% of people that try and time the market lose, the other 1% get either extremely lucky or have vast sums of money that they can use to move/manipulate the market
For the 100 million killed in WW1 and WW2, the establishment gave us the NHS, Housing and the Welfare state. This coupled with new found freedoms was the short term payment from those in charge for fighting their fight..
Now, they want it all back!
Our inflation is probably so strong because its necessities like food, rent and electric that are so expensive now. Its not allowing for the economy to stabalise.
We are in a downward spiral.
Exactly. Our lack of energy self sufficiency and the brexit vote which has increased the price of imports have absolutely crippled us. People got duped into placing economic sanctions on their own country. I'd happily vote for any party who'd reverse the brexit vote and build a fleet of nuclear power stations.
@@jamesbirkenhead876 😅 maybe I shouldn't tell you I'm a Brexit voter but I 100% agree we need to be more energy and food self sufficiency.
Economic investigator Frank G Melbourne Australia is still watching this very informative content cheers Frank ❤
Because they are still printing more currency into the economy. Increasing inflation whilst raising rates lower than the rate of inflation.
I think there will be a housing crash in the UK, I also think it will hit London & south east will be hit the hardest compared to other regions of the UK
Even a broke clock is right twice a day. The UK has an acute housing shortage and a lot of people want to live in the London in the South East.
Not enough houses for that to happen really.
@@Carl-tc2yb he's right though, London has one of the highest rates of foreign house investment. A lot of those houses are sat empty and the buyers brought into them for speculative returns, they will no doubt start selling if prices go down or stagnant to cash in their equity.
I am house modular builder we're facing macro-economic issues so our company was forced to shut down of the incompetent governments we have and this millionaire never understood people having issues with bills and unaffordable housing with interest rates and price. Since when last time did Fishy struggle to pay his bills? Oh wait he's rich and dodging tax so his wife billionaire.
Corrupted to the core of these politicians.
Inflation means prices rise. Price rising means materials rise in price. Materials to build homes cost more and therefore homes won't go down.
It’s mainly down to a failed energy politics, closing down coal plants and failing to replacing with reasonable priced nuclear energy. Energy is the foundation of our societies, failing to provide reasonable priced energy will make everything expensive, simples. And the green revolution will make everything much worse as wind and solar power is not only unreliable but also very expensive, and Labour Party want to build “land windfarms” as a solution?? Madness. They should have invested in nuclear plants 15-20 years ago to replace the coal, failing to do so well we will have to pay the price for decades unless politicians (and people!) actually wake up and make the right decisions.
Let us know where these houses are being built because I don’t see any 🤙
@@joshuaking8424 Where? All over the country really. UK need at least 300.000 new houses to be built every year due to huge immigration figures. It’s expected that this number will fall to under 120.000 so of course nowhere near enough. When house prices are falling the number of new houses being built will of course fall to so there you go. The main problem is of course not only the cost of building material but that the councils are not allowing people to build. There are still lots of land in the UK that is used for nothing, still people that own this land are not allowed to build as much as a shed, well I predict no matter how much we will see house prices falling the next decades housing win the UK will ALWAYS be expensive. Mainly because of the reluctance to build on available land, meaning the cost of land is the main problem. And when the cost of energy will be kept high due to failed energy politics it’s a disaster. Then we get the green maniacs that want to push the country back to the Stone Age we are at a total dead end. Labour say they will “solve” the energy crises with investing in land based windfarms, this is insanity as it’s not only very costly but it’s unreliable as well as the wind rarely blow much on cold days, we are pretty mush guaranteed very high prices on energy forever unless we build nuclear plants that deliver energy at a price of under 3 pence per kw/h, wind and solar cost over three times that…
@@joshuaking8424 That's because the profit margins of developers are being squeezed. Better to sit on the land and wait for better times.
Allowing the energy costs to soar and also for supermarkets to profiteer has now shown its impact. Strikes and pressure have meant wage rises so now prices don’t need to fall.
Younger adults who live at home have healthy incomes to spend on leisure which has fulled inflation and the cycle will continue
Supermarket profits have remained largely flat, maybe a 3-5% increase, for the most part. Meanwhile energy companies and banks have seen their profits increase up to 400%. Figure that one out
I think we are NOT being told the truth. Just arrived at my flat in Fuengirola did my main shop, bought same stuff at same supermarkt and WOW, last September my bill was 98 euros, yesterday it was 156 77 euros a massive hike and could NOT get four things I usually buy.
Does anybody else think the Government should have removed the money printed during Covid from circulation?
The BoE has effectively removed currency from circulation through various means. Have you not been paying attention?
Cmooon give me a housing crash
'Might have something to do with Brexit' - no might about it.
Like it did in the 70s when Labour was in power and went over 10% and we were an EU member.
Apparently, the UK is the second biggest importer of food...
If the Russian war has caused increasing energy costs... and increased grain costs... then, is it any big surprise that the UK suffers inflation in everything to do with imported energy and food?
I don't suppose Brexit helps matters... but without Brexit, one assumes more people come to the UK... so there is more demand for imported energy and food... which is at inflated prices... which fuels the problem...
Since the UK depends upon imports, because it's overpopulated, I don't suppose there's much the UK can do.
Pity we aren't self sufficient... but we aren't... so lots of people are going to suffer with the cost of food, rent and mortgages...
Who knew that 40 years of increasing national debt, importing cheap labour to boost gdp, to control (debt/gdp), straining housing and public services etc would end badly???
The main two factors that seem to be revealed in how different countries manage this inflation period well are their food and energy circumstances prior to the Ukraine War.
France had the lowest inflation perhaps due to their energy self sufficiency in nuclear energy, which is also state owned and can be controlled to not harm people over rising costs. This also includes food security, which throughout history, France was mainly an agrarian country with a well develop food industry. Being connected to the European Union also helps with this.
Germany also had inflation, but were able to mobilize their country to shift away from the use of Russian oil by reopening coal power plants. Their already strong economy in manufacturing and industry also helps despite how it is also suffering contraction.
The US itself has all these things available - food security and energy security. The shock of inflation would natural disappear for them, but stuff like SVB collapsing and the tech sector layoffs could have been disruptive. In fact, the way they are having a hard time is more so political rather than a problem of access to resources.
The UK has a harder time with food security and energy security and as these two increase in scarcity, they get expensive and everything else too. The UK is more cut off from food access with EU and imports are becoming more expensive. UK weather was never truly suited to support agriculture. Energy security is a hard problem to solve and so long as this remains precarious the inflation may not stop the upward trend. The dilemma here is the problem of when going back to fossil fuels to decrease energy costs, it rolls back clean energy progress. On the other hand, if clean energy is relied upon exclusively, it would not be able to make up for the decrease costs that a return to fossil fuels would create that can help decrease inflation.
Overall though times are tough they can precede real improvement as energy security develops and the world becomes more stable. It just perhaps sucks to find oneself in this situation in comparison to others
For some time now the least expensive energy is produced by onshore wind and solar. There is progress in installing large scale storage which is crucial where generation is intermittant.
@@jeremymanson1781 "For some time now the least expensive energy is produced by onshore wind and solar."
*Only in (very few) certain areas.
@@jeremymanson1781 Generation has been more than just "intermittent" recently - this winter was one of the least windy ever and electricity produced by wind was at an all time low. Can't rely only on one or even two sources.
@@Secret_Moon If those 'certain areas' cover the majority of the UK, then sure.
What does inflation look like for UK summer 2025m
I don't see how this ends without a crash, this isn't an overheating economy where demand growth exceeds supply growth.
The supply of energy has suddenly been undercut, trying to tackle inflation this way is like taking an axe to someone's knees because someone else cut part of their bed off.
Sure, interest rates will solve the problem but the damage will be insane.
I don't see how that would be better than building up domestic power generation.
0% interest is a really bad idea ... the BoE should have increased interest rates long before now. The next 12 months are going to be brutal.
Just so I understand, once my mortgage payments increase by £800, I'll be forced to stop spending on luxuries like gas, electric and food, and inflation will go down? Cool.
Exactly!!
When energy went through the roof I just about managed. When food prices rose. I adapted. Generally all of the inflation rates had very little effect on me, just a few cut backs.
Now the BoE is raising rates and my repayments have nearly doubled.
So the solution to higher than average inflation has basically tipped me over the edge.
I assume that it is to aid poor income households. But fundamentally it's hurting a core demographic.
Meanwhile, Rishi pledges to give millions more to Ukraine - what about people in the UK?
Our entire economy is fucked because Thatcher destroyed housing (RTB funds not allowed to be used for social housing investment or renovation) and that gave us a system where housing at mythical prices propped up in an unsustainable mortgage-fuelled growth cycle forms the bulk of peoples perceived retirement saving (no spare cash to save a proper private pension) and therefore no party can allow the cycle to stop or reverse. Its a mega-bubble.
Only way to solve it is massively increasing the state pension at the same time as building post-war levels of social housing (state pension compensating for the house price impacts).
or give it 10 years with no more migrants. birth rates since the seventies have been below replacement leves, so only 33 grand children to house where there were 40 grandparents. we have a demand induced crisis not a supply induced crisis. unless you know of significant numbers of properties demolished in a similar fashion to the blitz?
@@anthonylulham3473
Economy would be in a far worse state without the immigration we have had, but the only people benefiting from the housing crisis invest a lot into blaming migration for the supply issue they enrich themselves with.
Many easy to find charts showing the breakdown of the decline in UK housebuilding that evidence a supply issue resulting from the destruction of the social rented sector.
Lots of properties have indeed functionally exited the market - particularly in the social rented sector - due to deprecation as a result of the Thatcherite RTB investment restrictions being followed by crippling restrictions on council spending post 2010 (and Lab not making a meaningful impact there whilst in power).
The reason this is seen as a crisis of the middle in 2023 is because the bottom are priced out of mortgages entirely in a way they weren't in the 1980s, due to a combination of sky high prices and high rents, both of which can be traced back to and deregulation under Thatcher/ Major (though Blair & Cameron are more responsible for the accelerating impact BTL has on all this).
Hard working low earners can't afford a home of their own any more not because of migration, but because they (1) don't have the security of social renting to enable them to save a deposit; and (2) couldn't get a useful mortgage anyway because over-financislisation of the housing market has sent salary:price ratios through the roof (also making it much harder for family members to meaningfully help out than in the 80s).
Incorporated landlords and the politicians that legislate for them to are the problem, (and BTL, but it's incorporated BTL that's the real issue); immigrants have to live with the same shitshow we all do.
@@anthonylulham3473 "No more migrants". Clown.
Seemingly some odd contradictions in this edition. No income growth since 2008 , and now a cost of living crisis but core inflation is being driven up by spending on aircraft flights , hospitality, toys and entertainment.
This is because a large proportion of people,let’s say the over 55’s, own their homes outright so raising interest rates has absolutely zero impact on them.
Again, Bank of England and Govt actions are targeting those least able to bear the burden. They are clowns but economists follow the modelling (algebra) and for the most part are unable to think outside of this process. Take away their modelling and they’re clueless
Housing should not be a commodity, banks should not able to fleece people with what are necessary loans for a home and the UK governments should not be taxing those homes at extortionate levels just because some greedy estate agent sells a home to a moron for hyped up prices.
Why is no one covering how the government is making it more lucrative for farmers to grow wild flowers rather than food for the country. And not helping out the milk and egg industry that is collapsing due to running cost hikes.
1:36 "While the west of the world."
Elmur Fudd moment.
Quiet. He's hunting wabbits.
What about rental prices? Flat in London.
To offset inflation, all companies is need to do is increase customer waiting times
I love this take. It's like the inverse of malicious compliance.
Trickydicky: the silver lining - inflation is not good for interest repayments but it does decrease the national debt?
Hi, Has the Bank of England “Lost the Plot”.
Some of it’s (BoE) news interviews stated that food, energy and other high costs are down to Corona, War or weather. Blaming food cost due to weather in Europe being too hot or wet and now blaming the people for looking for pay rises and/or spending too much. Trying to reduce inflation by slowing down the economy, is mad. I’d love to get your opinion on it.
Average UK house price is virtually unchanged over the past 12 months, inflation 8%. House prices already down 8% in real terms.
Interest rates are nothing to do with the inflation we're seeing. We need to lower the minimum wage and force people on benefits into work.
Saying inflation might bring down the housing market implies the housing market is in a good place. But only who has hopes of buying a home knows that's not the case.
If people don't under stand what's going on then it's not worth looking at
Canadian housing market is in horrifying situation too , it is going out of control 😢
U.K is quite overpopulated, housing costs will never come down but inflation might as long as the population is stable and doesn’t continue to increase.
BOE has just hiked rates to 5%.
Because if U print 20% money, until the absolute depreciation of the currency won't get to 20%, inflation will continue.
Inflation should be fought by indexing company tax to inflation.
taxes are in % of revenue and salaries.
@@ivani3237 Yes, but add indexing by inflation. This forms an automatic slowdown mechanism for the economy, just like interest rates, but no central bank intervention is needed.
MMT Modern Monetary Theory posits fiscal policy rather than monetary policy to control inflation. Taxation is a more fine-grained control of money supply, but has political consequences. Tie taxation to core inflation, and this forms an automated money control system.
Brexit dividends keep coming!
House prices and rent rates are stupidly high
This is a painful time for British people.
Housing market prices are plummeting since 1 year ago
Debt is rising this makes matters even worse for people in Britain. They while like have to pay higher rates and the government as well.
Monthly inflation increase of 0.9% is bad news. But if that was only in house prices the news papers would be falling over themselves to say how good it is.
May be a stupid question but what is the mechanism between market pressure and Bank of England intrest rate?
Interest rates.. they raise the rates at which banks can borrow from one another as I understand. Those costs are then passed on to the consumer, the ideas being that this will lower access to capital and slow down demand for goods and services in the economy lowering prices.
@@Tedmason897 yes I found that in another video. I mean the intrest rates and not purely driven by inflation numbers? Are yields of goverment bonds also a critical factor in determine the intrest rates?
The is all down to poor economic policy for the last 13 years and Brexit. The economy hasn't grown so wages haven't really increased. Low interest rates have meant people can afford cheap loans and mortgages. The government have the cheeky to say that inflation is higher in other country as Rishi said in the house yesterday. And please stop comparing this situation to the 80/90's "well in my day the rates were 15%" argument.....it's way worse now than it was then.
Brexit, really? Inflation was lower in the UK than in countries like Germany, Netherlands, Denmark, Sweden etc for well over a year, no one blamed that on Brexit?? Just the last couple of months the inflation has not fallen as much in the UK but if you look at the numbers since 2020 inflation in UK overall has been lower than average in EU. The inflation in EU, UK and in all the western countries has of course nothing to do with “Brexit” but with failed energy politics. Specially in Germany and UK that failed to invest in the energy sector the last 15 years. Germany that closed ALL their nuclear plants without replacing it with an affordable alternative, and UK that closed down coal plants without investing in affordable alternatives, mainly failing in building nuclear to replace it with as nuclear is essential for a stable and reasonable priced source of energy.
@@truxton1000 Yes Brexit! There is a growing body of evidence which suggests Brexit is a key factor in the UK becoming poorer. The governments own independent watchdog has said our economy is around 4% smaller than it would have been if we'd stayed in. Poor economic policy is responsible for stuff like this because we don't really learn from situations.
@@y2graham «Independant» my a##. If Brexit is to blame, why had Germany and many other EU countries HIGHER inflation than UK for a couple of years now? Brexit?? Just the last month or two UK inflation is higher as it did not drop as much as in some EU countries. There are still some EU countries with much higher inflation than UK today. You got to stop this Brexit nonsense.
@@truxton1000 mate I'm not saying Brexit is totally to blame, I'm saying its a contributing factor in the mess we're in. Yes independent otherwise what you're saying is the government has worked with the watchdog to say that our economy is roughly 4% lower than it would have been? Everything's a conspiracy these days. The "I'll just say this and because I say it, it must be true" mentality.
@@truxton1000 Brexit made stuff more expensive, no denying that. Also made emigration harder, but that's besides the point
Like everything in this country brexit has been half arsed. In somewhere autocratic it would be done and the economy would have recovered.
The issue is that we've taken 2 years off achieving nothing as a country and expect everything to be normal, with 0 growth. And people won't stop spending.
like these videos but the 'guaranteed to break either the growth or halving inflation pledge' is not accurate!
"we will inflate forever, you will own nothing. You will eat ze bugz."
Yes.
“Might” have something to do with brexit 😂
ummm 18.3% is not 'Significantly' lower than 19.0%. its 96.3% of the value of 19.0, so a relative 4% decrease in the increaseing rate of food inflation.. a relative 4% drop to the increasing rate is not significant.
I said whwn they started the interest rate hikes they would make little or no difference. Unless you want to starve the population the only answer is a closer relationship with the EU.
Unfortunately none of the political parties can promise what we really need as that is up to the EU.
1:24 "stupidly high" Yep. That's it.
The thing we don’t mention is government debt. Government has to default on it, this is done by printing, inflation or outright write off none are palatable as someone will get hurt. They won’t make the best decision.
gotta love the private sector. inflation is good if u have capital. solution to all problems is literally just working class owning their labour and decide where the labour will be put into
03:42 ....spot on..
Cordialement,
You can earn 5.5% on a UK savings account but inflation at 8.7% will mean you lose money. Why would anyone save right now? BOE is telling you to spend by setting rates too low. If BOE wants to reduce inflation it must make saving worthwhile.
give the man a cigar. interest rates too low for too long and consumerists have behaved badly. rates need to favour both buyers and savers
Because it’s called having an emergency fund for when something does go wrong! I’ve saved money before all this (most in covid), but people have no self control. If I was to lose my job I have about 3 - 4 months worth of monthly expenses and growing. I could find a job within a month the way the job market is. Learn to save before times like this happens 🤦♂️
@@MrThewillows It's obvious to me that while real interest rates are negative consumers will keep spending because there is little incentive to save. Once the savings interest rates are higher than inflation behaviour will begin to change.
Ever heard the word "Liquidity". Everyone needs it. My profitable businesses have gone bust because they don't have any cash to pay their creditors with.
5.5% must be for fixed right? Think the best Easy access is closer to 4%, and funnily enough not matching the mortgage interest rates
Is the reason the BOE raise interest rates to stop people spending money hence lower demand hence prices fall?
That's the theory ! Raising interest rates reduces people disposable income, therefore they have less free cash to spend which reduces demand and prices fall.
😂 u really think all these rich people who own all these properties are gonna allow the government to bring down their properties value pretty sure most of them own many properties 😂
The BoE is tasked with tackling inflation, it is not necessarily for the cause of inflation, and neither responsible for it.
hopefully.
Prices Controls
Sunak needs to push price controls and raise minimum wage by 20%.
And immediately push for birth control . Might even should be appetite suppressors and give them to starving cititzens.
@ 5.11 the bank of England is not responsible for inflation they're responsible for controlling inflation by steadily raising interest rates. It's true that the PM campaigned on bringing inflation down but most of the inflation is coming from the supply side of the equation. This time last year everyone was losing their minds on the inflation figures in the US but it has halved since cuz of the Feds aggressive rate hikes plus supply chain catching up with demand, the same would eventually happen if we didn't sanctioned ourselves with Brexit.
Very true
@@PaulBurns-cs1xe you mean debt (UK debt)
@@PaulBurns-cs1xe yeah yeah we all heard armchair economists in RUclips's comments section preaching that to us as if they know better than people in charge or even knew anything until this all became a news but hindsight is a wonderful thing as the saying goes 👍🏾😁
Food inflation is particularly bad when you don't grow enough to feed your population.