The Bank of England, having recently said interest rates would not go up, is now saying they might. Yes well!
The B of E’s record is mixed. On many issues relating to faults in the financial structure laid bare by the crash, good progress has been made. But the political decision to vary interest rates has proved too controversial for it to act. There is no such thing as the finite economy or the perfect model. It is all a matter of priorities and preferences. The only certainty is that there are winners and losers.
Under the pre-Thatcher post war model, a socialist consensus supported by the two main parties, standards for ordinary people continuously rose, while the rich struggled, if that is the right word, with the burdens of ultra high taxes and aggressive industrial relations. Under the post-Thatcher model, in which markets and central bankers have been put into the driving seat, government is left to tinker with distribution of the outcome, while not able to influence the outcome itself. So the rich have become first super rich, then mega rich, then uber rich, while everyone else struggles.
Instead of benefiting from low interest rates, with low payments on affordable mortgages, they have vast, near unaffordable, mortgages on over inflated properties. While the Bank talks about keeping rates low, property prices go on rising. So the people who borrow on the money markets to lend are protected, while their customers, the ordinary folk in suburbia, are forced to pay more and more because property prices have no restraint and go up and up.
Well it is all going to end in tears. Lots of them.