Today’s Mini Budget.

Time will tell of course - you may all be right and I’m wrong. But unlike many on here I really do WANT us to do brilliantly and I feel optimistic.

As someone put it in a letter to the Times, after tax cuts for the most well off there will certainly be a trickle-down effect - to yacht brokers in Monaco, etc.

We've rattled the EU cage?
LOL
The cage we’ve put ourselves in, they will let us out but only if we promise to play to their rules.

Not obsessed at all volver. I just feel that if the EU are horrified by what we’re doing to their financial set up regards bankers and the trading floor, we must be doing something beneficial for Britain. Oh wait, not Scotland. Sturgeon’s not happy either, some of her financial whizz kid might get on the motorway and commute for 45 minutes to Berwick on Tweed for a more advantageous package of T&C.

Anyway it’s too early to tell yet. I’m one of those who felt we needed to do something to boost the economy being as we're a service industry with very little manufacturing. Doing ‘more of the same’ wasn’t going to cut it. We needed a turbo boost and I for one hopes this helps provide it.

That said, there are many Labour voters praying this will fail dismally hoping they can win the next GE in 18 months. Also many banking/financial background Remainers are dismayed as this new approach puts clear blue water between us and Europe with regards to fiscal matters. They like things to be closely aligned to the EU in the vain hope were going back at some stage. No wonder they’re annoyed and upset.

I hope this works. Not because it’s ‘Tory’ or Truss but because our country needs something to pick us up from the post pandemic quagmire that sadly is dire since the Ukraine war with Russia and all the energy ramifications.

Whitewavemark2

And the IMF?

Never known to overreact.

IMF reaction is to the way it was announced and the way the finance market has reacted because it could get worse, the competence of Truss has been questioned.

We've rattled the EU cage?

You're obsessed.

I know you don't care, I just wanted to say that.

I don’t need your forgiveness Daisyanne! We have opposing views that’s all.
?
It’s allowed.

John Redwood has just been on Sky News. He’s very intelligent. No panicking BoE hike in interest rates over this. Their job is to keep an eye on inflation & they will make their move as and when.

I think if we’ve rattled the EU’s cage we should crack on. They can’t do what we’ve just done and have to approach their problems in Europe (which are manifest) in a different way.

I don't think the blinkers are ever coming off some people, Wwmk2...

Whitewavemark2

Truss promised to hit the ground from day .

Not only has she hit the ground, she is furiously digging a massive hole.

Never mind digging - Truss hit the ground so hard that the impact alone made a b****y great hole!

Truss promised to hit the ground from day .

Not only has she hit the ground, she is furiously digging a massive hole.

And the IMF?

Never known to overreact.

I don’t usually agree with Urmstongran, there is an overreaction to the mini budget but that is exactly what the markets do and Truss seemingly did not account for that, especially with no OBR report to justify the cuts. This crisis is affecting almost all countries including China, investors are selling everything and buying US dollars.

If the tax cuts had been announced in a proper budget with full justification there would have been less reaction, are we going to see a U turn, no, let’s hope the temper any further change and not dig an even deeper hole.

Polititians never learn from history, what investors, home and overseas think matters, you cannot buck the market, waiting 8 weeks for a budget makes it even more uncertain.

In my limited but honest opinion when you see problems in the UK with lending and the mortgage market we are in big trouble and even bigger trouble if the government does not step up now and do something
The help with energy was not targeted we are middle earners by no means rich but could deal with any increase in energy costs many could not and that’s where the money should have gone to
No point in cutting corporation tax if you haven’t got a business left to pay tax on
All I ask from any government is a stable economy to work in

For business you have to see interest rates in conjunction with inflation if there is a compelling case for investment, to improve efficiency or launch a new product, it is sensible to invest.
For housing there is likely to be little price growth in the next few years and a lot of uncertainty, so unless you have a lot of equity best to sit tight until stability returns.

From the BBC

City insiders have warned that tax cuts designed to stimulate economic growth might have the opposite effect.

Markets were expecting baseline interest rates set by the Bank to rise from 2.25% now to 4% next year. Since Friday's not-so-mini-budget, the bank rate is now expected to hit nearly 6% in May of next year.

Companies don't get to borrow at that rate, they pay extra on top, for the perceived risk they won't be able to pay it back.

For example, Marks and Spencer would have to pay 10% or more if it was to borrow for 5 years in the market today.

Very few companies are going to borrow to invest in their business - build a factory, hire more people, expand research and development - at rates that high.

In fact, they are likely to try and reduce the debt they already have by not renewing loans as they come to the end of their term - reducing their spending and investment power.

Urmstongran

Well I think it’s too soon to tell and we are having a ridiculous over reaction. Cancelling two tax rises and giving a paltry 1p cut in income tax and the social democrat political-media blob are out in force weeping and wailing about things (and usually blaming Brexit) failing to notice that the Euro dipped below dollar parity a couple of weeks ago, that inflation is as high in the EU as it is in the UK and that Germany is in recession.

The autumn budget is in eight weeks. That one will steady the ship with an OBR in tandem.

Where do you source your supply of blinkers?

Urmstongran

Well I think it’s too soon to tell and we are having a ridiculous over reaction. Cancelling two tax rises and giving a paltry 1p cut in income tax and the social democrat political-media blob are out in force weeping and wailing about things (and usually blaming Brexit) failing to notice that the Euro dipped below dollar parity a couple of weeks ago, that inflation is as high in the EU as it is in the UK and that Germany is in recession.

The autumn budget is in eight weeks. That one will steady the ship with an OBR in tandem.

Will you get off whatever internet news you follow and listen to a normal one. I might just forgive those who didn't realise what their Brexit vote would do but not those like you who did. And now you back the far-right dreams of this government. Listen to the rest of the world. At least understand that what this government brings on us will be on the heads of those who put them there and they will never be forgiven.

I am hoping for one of the Conservative party's famous U turns to steady the ship before it crashes into the rocks.

Well I think it’s too soon to tell and we are having a ridiculous over reaction. Cancelling two tax rises and giving a paltry 1p cut in income tax and the social democrat political-media blob are out in force weeping and wailing about things (and usually blaming Brexit) failing to notice that the Euro dipped below dollar parity a couple of weeks ago, that inflation is as high in the EU as it is in the UK and that Germany is in recession.

The autumn budget is in eight weeks. That one will steady the ship with an OBR in tandem.

interest rates fr fixed deals were 5% ish in the 90s and 00s too from my memory, even in 2010 ish

it's almost as if the interest rates have been kept low to help property rise so dramatically in price in the last decade

We married and bought our home in 1960, I believe the interest rate was 5%. Home purchasing was different to now.

How many properties do you own JenniferEccles?

JenniferEccles

Yes the size of our mortgages was smaller in the 70s and 80s when interest rates were well into double figures, but of course salaries were also very small.
We could only have dreamed of just paying 5 or 6% then.

There just seems to be such a fuss made about everything these days.

Yes I accept times are hard, but they were for us all too without all this anguished hand-wringing.
We just got on with it.

You’ve got a selective memory Jennifer Eccles. 1% of all mortgaged homes were repossessed in 1991 as a result of the recession then. There was plenty of anguished hand wringing, as you so delicately put it, happening then too.

Katie59

Back in 1980s you would not have been allowed a mortgage at the level we have today and deposit would have been higher too. The level of borrowing is far to high, not just housing but cars and credit cards too, most of us are going to have to cut back on non essential spending drastically

Back in the 1980s loan to value was actually higher than it is today the average being 94%
We put down £800 on a £14.5k house
If I remember correctly we could borrow between 2.5 and 3 times salary.

One of the problems I believe is that our economy is over dependent on the housing market and increasing house prices. Unfortunately average salaries have not kept pace with house prices, whereas mortgages in the 70s were a more affordable 3 to 4 times average salary, they are now at least 11 times average salaries in London.
As you move north from London and SE and SW the average ratio drops but still much higher than it was in the 70s, making home ownership out of the reach for many.

It frequently needs two salaries to service a mortgage, and there are knock on expenses, ie for costly childcare.
No comparison for how it was when we first bought a house.