Must subsidise demand. Must subsidise demand
Part of what the Chancellor said is undoubtedly true:
Red tape is a “boot on the neck of businesses” and risks undermining the UK’s dash for growth, Rachel Reeves has said.
In a major City speech, the Chancellor on Tuesday night urged Britain’s regulators to ditch their “excessive caution” as she rewrote rules for banks and building societies to help more people on to the housing ladder, deliver better returns for savers and boost economic growth.
We have many rules, regulations, laws and orders which insist that no bugger be allowed to do anything. Which is the reason we have no economic growth. Clearling away those rules, regulations, laws and orders which prevent any bugger from being able to do anything would be a useful manner of gaining some economic growth - which is, as we all know, people doing things.
So, what is actually done?
The measures, called the Leeds Reforms, will rewrite mortgage rules to make it easier for people to borrow up to 4.5 times their income when buying a house, as well as making it easier to remortgage.
The Chancellor has decided to subsidise demand. Not free supply in the slightest, but subsidise demand.
Yes, really. The price of housing is how much people can pay for housing - not houses. So, if it’s possible for people to finance more housing then the price of houses will rise. This is not the right thing to be doing - but this is what is being done.
Aren’t we the lucky ones.
Tim Worstall