While the world’s financial market are going through a turbulent period it is possible that it might mean some good news for the UK’s beleaguered home owners. The result may be a delay in the raising of the Bank of England’s base rate – though it may not prevent it completely.
Soft manufacturing figures have eased the pressure on the Bank to put up rates yet again as it strives to bring inflation back under control.
With the financial market showing its brittle side in recent days the economy could be shattered by further rate rises. Five quarter point rate rises in the last 12 months have pushed homeowners to the limit of their budgets, and if any shares they possess, or pensions funds are adversely hit by the recent market fall, then their spending may not just slow down, it may stop entirely.
Before last week’s market upheaval experts were forecasting that rates would go up to 6% as early as September, but that threat appears to have receded, and now they are saying a rise may be delayed until November.
Figures from the Office of National Statistics show that expenses for British firms fell unexpectedly by 0.5% in July as prices of metal and food eased back. The price of goods was raised by manufacturers by only 0.2% in July. This would seem to suggest that firms are not outing up prices as much as the Bank had feared.
Despite all that has gone on, however, the housing market stayed firm in June. Government figures showed a 12.1% annual rise to June. The housing market is still expected to slow down later in the year.
In London high street sales jumped by 11.6%, going against the trend of gloom elsewhere in the country which have suffered the effects on storms, floods and higher borrowing costs.
Figures are out this week for inflation and the minutes of the August Monetary Policy Committee meeting may give some clues as to which way next month’s base rate vote will go. For now, with the markets running scared, we may be spared another rate rise.
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