Prudence was killed off, now Austerity. But was it a mercy killing?
In some quarters of Financial Services, there is gnashing of teeth with regards Government’s policy initiatives, such as Help to Buy, further inflating a recovery in a housing market that will lead to more debt. But to see this in isolation, as some neglect at the wheel, is to miss the change of mood that has occurred at the heart of global politics.
At the recent G20 meeting in Russia, a 27-page release stated, “Strengthening growth and creating jobs is our top priority,” highlighting a continued move away from the past emphasis on repairing national budgets. The biggest challenges to the world economy, the G-20 statement said, were “weak growth and persistently high unemployment” – a shift away from the focus on repairing national budgets, a priority for deficit hawks like Germany.
The world’s indebted premier economies know that with elections looming and patience thinning, growth and prosperity are a priority. The answer is to help consumer spending and loosen the grip on the credit reins. So while the mood music is still all about “Austerity”, the reality in the UK is that house prices are growing across the nation, affordability is steadily worsening, and lending is increasing to meet the pent up demand. But if consumer confidence returns as a result, this is a price worth paying.
There has not been any resolution to the West’s debt issues. Does it matter? Possibly not because as policy people know, a crisis postponed often becomes a crisis resolved. The point is we all feel better for this.