Gary's News and views

Gary Streeter MP for South West Devon

Gary writes a weekly article which appears in the Plympton Plymstock and Ivybridge News in South West Devon. The articles are published here.


Thursday, 15 August 2013


We've certainly had the bust, now where is the boom?

Answer: just around the corner. The announcement from the Bank of England last week that interest rates would stay where they are until unemployment reaches 7% (in other words an extra 750,000 new jobs have been created) was significant. Although couched in caveats, it has sent a clear signal that rates will remain at 0.5% until 2016. This may not be true, but it will give people confidence to  borrow once again.

Building society and banks have dropped their lending rates to new house buyers. News this week that first time buyers are now entering the market in record numbers and that house prices are beginning to rise again, all points us in the same direction. The return to a buoyant housing market is not very far away. This is hugely important for the economy as people moving home usually means new carpets and kitchens etc.

House builders are sensing this uplift too. I had a briefing on the proposed new town at Sherford yesterday. It is all progressing, with work to begin next year. The Plymstock Quarry site is also pressing forward and new planning applications for other parts of the urban fringe of Plymouth are pulsating down the pipeline.

At the same time the banks (apart from RBS) and the City of London seem to be recovering and poised to stride forward once more. Financial services are also an important factor in the UK's economy.

To temper this, global conditions remain uncertain. The Euro zone problems have not gone away. The Spanish are sabre rattling over Gilbraltar simply to distract their own people from their disastrous economic woes – youth unemployment over 50%! And in the UK public finances remain bleak so expect no new government spending for many years to come. These factors will act as a partial brake on growth.

Time to dust off your crystal ball. We know that there is a lot of slack in the economy and that in some areas unemployment is high. It will take some time for the economic energy unleashed by new activity in the housing market to feed its way through, but most of us could pencil in a few dates in the calendar.

Interest rates to rise, possibly sharply, in 2016/17 to slow down the economic boom?

There have always been economic cycles since mankind invented trade. There is nothing new under the sun.

posted by Gary @ 10:27