The current economic situation is grim. Mortgage rates are rising, lenders are looking for reasons not to lend, the housing market looks unstable and the cost of fuel and energy prices is of grave concern.
What does the government seem to be doing about this? Very little.
The current liquidity crisis needs urgent attention. The government's working party to ease liquidity problems is something that should have been established already.
Instead of urgent action we will have a report in the summer and proposals in time for the next pre-Budget report.
Decisive action is required now. The whole handling of the Northern Rock affair shows how misplaced this government is. The government has effectively become a lender having nationalised Northern Rock and the Bank of England has been extremely slow in cutting interest rates.
If you look at America and the way the Bear Stearn's debacle was handled, this was far more encouraging. It was dealt with swiftly without US taxpayers bearing the risk of nationalising a bank. The Federal Reserve has also reacted by slashing interest rates to try and free up some liquidity in the system which may or may not be the answer, only time will tell. The point is they seem to acknowledge the seriousness of the current climate.
The UK government seem to be more worried about the price of bread and the self imposed 2% inflation target. In the recent budget, at a time when the economy is in dire need of a shot in the arm, all the chancellor did was fiddle with taxation on booze and cars while pining once again after long term fixed rate mortgages.
The housing market which is the bedrock of the economy could have benefited from measures to help more first time buyers onto the property ladder. An increase in the minimum Stamp Duty threshold would have helped thousands of would be buyers. As ever the government did nothing!
The handling of the current crisis is yet another nail in the coffin for this government. I certainly know who will not be getting my vote at the next elections!
If you have any questions on this article or others like it, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us at www.solution-mortgages.co.uk