Speaker 1: But if you if you see, if we've gone back
Speaker 1: to Mars and they see we're gonna put interestries up
Speaker 1: from one point percent to four and a half percent,
Speaker 1: and you said places were only going to four by
Speaker 1: ten percent in the next year, people would thinking it optimistic.
Speaker 1: So actually, certainly, certainly it does not sound it's not
Speaker 1: crazy way by any means. Okay, so effectively, John, Just
Speaker 1: for the record here everybody, John is predicting our housepress
Speaker 1: fall of significantly more than thirty not significantly more than
Speaker 1: that is too fortune, but I mean definitely funny. That
Speaker 1: was a Blueberg senior reporter and author of the Money
Speaker 1: Distilled newsletter, John steppec in a Twitter space, one of
Speaker 1: our best ever performing Twitter spaces, something to do perhaps
Speaker 1: with the very eye catching four cars or doominated forecast
Speaker 1: for a huge drop in the housing market. I'm David
Speaker 1: Merritt and this is in the City, Bloomberg's podcast, connecting
Speaker 1: you to the stories and the voices at the heart
Speaker 1: of the City of London. So, as promised, this week,
Speaker 1: we are going to talk about the outlook for both
Speaker 1: housing and inflation in the UK, and to do that
Speaker 1: we're joined by our senior reporter Phil Audrick Are UK
Speaker 1: eco expert and senior reporter John Steppeck, author of the
Speaker 1: Money Distilled newsletter and as you heard the voice behind
Speaker 1: an epic prediction for the housing market. John, let's start
Speaker 1: with you, still sticking with this third episode number. I
Speaker 1: think it's sent chills through London and Britain to hear
Speaker 1: you say that their house prices might lose a third
Speaker 1: of their value. Yeah, I mean late said that. It's
Speaker 1: very careful to see in real tims, which is after inflation,
Speaker 1: and obviously inflations relatively high at the moment um. Rightly,
Speaker 1: if you look bright in history, it's not like that
Speaker 1: draystick fordcasts. Assuming that our host, please crash actually happens.
Speaker 1: The average and again real terms over the last four
Speaker 1: house price crashes are so since the nineteen seventies has
Speaker 1: been for prices to fall by about twenty seven twenty
Speaker 1: eight percent. So in the seventies, for example, house places
Speaker 1: never fell in nominal terms, but because of the high
Speaker 1: rate of inflation during that period, you actually get a
Speaker 1: real terms fall of about thirty percent between nineteen seventy
Speaker 1: three and nineteen seventy seven, whereas in the two thousand
Speaker 1: and eight crash. For example, you had twenty seven percent
Speaker 1: fall from peak to trough. Most of that was nominal
Speaker 1: terms because inflation obviously was absolutely tiny after the financial crisis.
Speaker 1: So the act in terms of the actual scale with
Speaker 1: the peak to trough fall is not actually outlined. Is
Speaker 1: it's not an outlier? Um. The question is obviously, look
Speaker 1: why would that happen? And the very simple answers is
Speaker 1: because interest rates have gone up. People always talk about
Speaker 1: how physical supply will prop up the market, or you
Speaker 1: know there's a shortage of housing, etcetera, etcetera, but not
Speaker 1: the physics. I mean, you can complain about the physical
Speaker 1: supply houses in this country. You can think that planning
Speaker 1: systems to restrictive. There are all manner of reasons to
Speaker 1: reform the way we built houses and what we do
Speaker 1: the house seas and how we sell houses, etcetera, etcetera.
Speaker 1: For the fundamental driver of the price and the reason
Speaker 1: that's so unaffordable just now, it is because interest rates
Speaker 1: have been on a secular downtrend for about thirty five
Speaker 1: forty years. So when interest rates go up, the amount
Speaker 1: you can borrow for a mortgage goes down, which means
Speaker 1: that basically the price of houses has to come down.
Speaker 1: It's a kind of it's almost an arithmetical uh, kind
Speaker 1: of logical following um. And so obviously interest rates have
Speaker 1: gone up this year, they've started to take down a
Speaker 1: little bit. I think it's very unlikely they'll go back
Speaker 1: to zero s because that was an aberration. Well, now
Speaker 1: I think in an era inflation is going to be
Speaker 1: higher on a kind of long term basis. And even
Speaker 1: if that just means that the average is about three
Speaker 1: percent over the next ten years, that means interest rates
Speaker 1: are going to be hiring again. And that means that
Speaker 1: house places have to connect. So you are sticking pretty
Speaker 1: vamily by this. It sounds like it might even be
Speaker 1: a sort of modest forecast. Steve, you're training and taste
Speaker 1: me strong, go stronger, absolutely fill. What's the implications for
Speaker 1: the economy as a whole of it? People losing a
Speaker 1: third of the value of their houses. Well, that's the
Speaker 1: interesting because that the prices set by the marginal buyer. Right,
Speaker 1: So just because somebody doesn't have as much money to
Speaker 1: spend on the house because they can't get as large
Speaker 1: a mortgage. Now the interest rates have gone on means
Speaker 1: that they will bid less, and so then all these
Speaker 1: house prices which will which are related to you know,
Speaker 1: if you're buying a two bed house and there's another
Speaker 1: two bed house nearby, it's going to have a new
Speaker 1: value because that's the that's the new market value. And
Speaker 1: so if you're staying put, it doesn't really make an
Speaker 1: awful lot of difference. That The factors which really are significant,
Speaker 1: obviously are whether unemployment is going to be shooting up
Speaker 1: and people are selling into negative equity because they have
Speaker 1: to get rid of this enormous debt trap that they're
Speaker 1: stuck with, which is the mortgage, and so that that's
Speaker 1: basically the most the most critical factor in terms of
Speaker 1: the economy. The other, the other, the other impact is
Speaker 1: obviously the wealth effect. People don't feel that they've got
Speaker 1: this enormous amount of wealth which they can they can
Speaker 1: release if they need to, then that just makes them
Speaker 1: spend a bit less. But before the financial crisis, people
Speaker 1: were releasing their equity. There's these equity release mortgages. People
Speaker 1: take more and more money out of their house as
Speaker 1: the house's value went up, and then they would spend
Speaker 1: all this extra money. But that's really not been a
Speaker 1: sort of something that's happened since the financial crisis, so
Speaker 1: because they haven't been able to write, the banks aren't
Speaker 1: well doing those schemes, and they can you can remore.
Speaker 1: You could remortgage every time you've paid off like twenty
Speaker 1: percent or whatever, I know, tem tempers, and you could
Speaker 1: then re mortgage up again. And also if the value
Speaker 1: of the house has gonna be and you have you know, viewing,
Speaker 1: your earnings have increased, you could remortgage again. But it
Speaker 1: just hasn't been as much of a factor. So I
Speaker 1: don't think the the economic impact of falling house prices
Speaker 1: will be as dramatic as as has been seen in
Speaker 1: the past, for the for that sort of slightly muted
Speaker 1: wealth effect, and also for the fact that really what
Speaker 1: what will define whether the housing crisis trans transmorse into
Speaker 1: a absolute economic crisis is if it's accompanied with this
Speaker 1: unemployment shock, which then causes massive sales. And the only
Speaker 1: part of them housing Mike where you can really see
Speaker 1: that happening a little bit is the buy to let
Speaker 1: and where they're all on interest only deals, so they're
Speaker 1: going to get really whacked by the increase in interest rates.
Speaker 1: That's gonna be that's gonna be a direct that's gonna
Speaker 1: be felt much harder than on the repayment side. Um,
Speaker 1: and they're going to start I mean, the banking was
Speaker 1: saying this last week that they're going to start selling.
Speaker 1: They expect the bit to let guys to start selling
Speaker 1: and that will put more pressure on those sort of
Speaker 1: marginal prices. So you're you can get you can get
Speaker 1: closer to to the apocalyptic forecast from John. But you know,
Speaker 1: so if John's right about interest rates sticking around that,
Speaker 1: you know, even if it's three percent or so for
Speaker 1: a while, there's this rolling impact, doesn't there from that
Speaker 1: of people remortgaging or their deals, they're very low rate
Speaker 1: deals coming to an end. I just did mine a
Speaker 1: couple of months ago, and it's a bit of a shock, right,
Speaker 1: Suddenly your payments are going up a lot. How are
Speaker 1: we seeing that effect? And that's only gonna get worse,
Speaker 1: isn't it? Throout the people are gonna have less money
Speaker 1: to spend in this economy for years to come on
Speaker 1: they because of what's happened to interest rate, there will
Speaker 1: be that people will have less. But you know, in
Speaker 1: a way, having the fixed deal means that you can
Speaker 1: plan for it. You've got you know, you know it's
Speaker 1: coming down the line, and you can start you can
Speaker 1: start planning for it. That will depress consumer spending. But
Speaker 1: the it's not having as dramatic effects as you know,
Speaker 1: these rate rises as would have had in the past.
Speaker 1: You've got the banksters. Over the next year, we're going
Speaker 1: to have four million mortgages in total, either they're on
Speaker 1: a one point three or on standard variable rates so
Speaker 1: they're just floating um. And there's another two point seven
Speaker 1: uh that are fixed rates that are going to be refixing.
Speaker 1: Then you also have actually about five million people in
Speaker 1: private rent rental who will probably get all of these
Speaker 1: interest rates passed directly onto them as their as their
Speaker 1: rents go up as the landlord tries to recover his
Speaker 1: his higher mortgage costs. So that's about nine you know,
Speaker 1: that's about nine million households out of at twenty eight
Speaker 1: million households who are going to feel directly affected by this.
Speaker 1: There's going to be some blood path there's going to
Speaker 1: be some horrible, horrible experiences for some people that isn't inescapable.
Speaker 1: But when you're looking from the economic point of view,
Speaker 1: looking at the aggregate picture here and that that isn't
Speaker 1: enough to make you terrified that there's going to be,
Speaker 1: you know, some kind of economic devastation through this channel.
Speaker 1: I might take anything. I mean, rates gonna peak anytime soon, John,
Speaker 1: have you watched your fore cost for NAT year? I mean,
Speaker 1: obviously the market, I think streets are going to peak
Speaker 1: or the Bank England entrist street is going to pick
Speaker 1: up a bit four and a half percent next year.
Speaker 1: And I can see the inflation is properly highs peaked,
Speaker 1: And I don't actual think inflation is going to be
Speaker 1: the big body fund next year. I think, toy, we
Speaker 1: have the supplieses will start coming in as that we
Speaker 1: get to four and it doesn't go back down to
Speaker 1: what we've seen in the past. I think that's one thing.
Speaker 1: But I mean, I agree we haven't the Phillips said,
Speaker 1: I don't think the housing market itself is as much
Speaker 1: of a problem for the wider economy as it was
Speaker 1: in for example, two thousand and eight. Um. You know,
Speaker 1: it's We've had quite a lot of statistics point out
Speaker 1: that the people who have mortgages at the moment tend
Speaker 1: to be better off than you know, the average because
Speaker 1: affordability is so bad. I mean, a lot of people
Speaker 1: have just been squeezed out of there. You know, in
Speaker 1: banks aren't as vulnerable to it either. And the other
Speaker 1: good things that wages are going up, they're only growing
Speaker 1: up in nominal terms, cause inflation is so high we're
Speaker 1: still kind of losing it in real terms. But I mean,
Speaker 1: the private sector can average pay rise at the moment
Speaker 1: is over six percent, which is quite don't certainly chunky
Speaker 1: compared to the recent past. If that can continue by
Speaker 1: inflation comes down, then you know you've got you know,
Speaker 1: cross your fingers. Maybe you get a point where real
Speaker 1: wages actually start to go positive um and as long
Speaker 1: as unemployment doesn't pick up, then you could have a
Speaker 1: pretty shallow recession and not an awful outcome again and
Speaker 1: aggregate um and still have how spaces coming down and
Speaker 1: actually affordability improving. And then maybe take this sort of
Speaker 1: the silver lining for this for those people who want
Speaker 1: to buy a house, right, it's actually kind of they're
Speaker 1: going to sit on their hands for a bit, right
Speaker 1: and see that the thirty percent drop in prices, it's
Speaker 1: going to mean a lot of more people can get
Speaker 1: in the house and ladd al right, I mean it's
Speaker 1: going to be and that is that actually gonna be
Speaker 1: that positive for the economy as a whole. It would
Speaker 1: be good politically. I mean, I think something that well,
Speaker 1: I mean the overall eventually be a good thing. I mean,
Speaker 1: it's I think we've kind of perhaps lost sight of
Speaker 1: the fact that houses really should be affordable. You know.
Speaker 1: It's like, at the moment, I mean accordantly were in
Speaker 1: s how space affordability relative to income, the average hosen now,
Speaker 1: of course nine times the average income, and that is
Speaker 1: the highest ever they can A long run average is
Speaker 1: closer to something like three and a half four and
Speaker 1: a half, and that has ticked higher over the years.
Speaker 1: About nine is nine is ridiculous, um, And really I
Speaker 1: don't think that you know, in an ideal world would
Speaker 1: be living in a country where everyone could afford to
Speaker 1: buy a house or rent a house and they weren't
Speaker 1: constantly worrying about the impact of the coast of simply
Speaker 1: having a roof over their heads on their standard of living.
Speaker 1: It's not great for productivity or intergenerational stability and all
Speaker 1: those things. So if we get a decent sized correction
Speaker 1: in the house and market, then you take some of
Speaker 1: the sense that young people have of, you know, basically futility. Um,
Speaker 1: it is certainly a sense I get from talking to
Speaker 1: some of them even around to here. And you know,
Speaker 1: if you're working in the Bloomber building, you're not going
Speaker 1: to be the most deprived young person in the world. So, um,
Speaker 1: you know, I think it would be a very positive thing.
Speaker 1: You see some sort of relief on the house price front. Yeah,
Speaker 1: they so that. I mean because obviously the barrier has
Speaker 1: been deposits. Um, you can't get the deposit too. You
Speaker 1: can get the debt, you can't get the depot that.
Speaker 1: So if the property price comes down to you're more
Speaker 1: likely to be able to get the deposit. Plus, if
Speaker 1: your salary has gone up by six and a half
Speaker 1: percent and you know you're earning four percent on what
Speaker 1: little savings you have or whatever, then um, you know
Speaker 1: it just it's all kind of moving in the right
Speaker 1: direction in terms of helping, uh, that intergenerational furnace, that
Speaker 1: that equity, which is part of social division at the moment,
Speaker 1: so absolutely would be in some ways were supposed to
Speaker 1: be in recession. Right, this is what we're being told.
Speaker 1: And you said, John, maybe that's quite an optimistic view
Speaker 1: that perhaps we come out of this it's a little
Speaker 1: bit shallow. At the Bank of England have said some
Speaker 1: pretty bad things about but the forecast, what sort of
Speaker 1: recession are we really going to be in for the
Speaker 1: rest of the next year and when are we going
Speaker 1: to come out of it? Fair? The Bank of England's
Speaker 1: forecast was based on a projection for interest rates to
Speaker 1: to get to something like five and a half percent.
Speaker 1: I feel like that's not gonna happen, but I mean
Speaker 1: it may, but there's every single everything is aligned. I mean,
Speaker 1: but politically and on monetary policy, there's no desire to
Speaker 1: go to that level of interest rate. At the moment
Speaker 1: interest rates of three and a half percent, they may
Speaker 1: get to to four and a half percent, but even
Speaker 1: even at three percent, the banking was forecasting a shallow recession.
Speaker 1: But I had this weird number in its forecast, which
Speaker 1: was that the households typically in a recession to go
Speaker 1: into their savings because they that's what you're savings are
Speaker 1: there there your buffer And in this forecast the Bank
Speaker 1: of England has them increasing their savings, so they're saving
Speaker 1: more and more, which just you know, if you and
Speaker 1: the o b R had a very different take on that.
Speaker 1: They said that people will use their savings and as
Speaker 1: a result, they said, the forecast in the o B
Speaker 1: report was much shallower than the Bank of England. And
Speaker 1: there's no individual macroeconomic instability. There isn't like massive debt
Speaker 1: overhanging the corporate sector. There isn't a massive debt overhanging
Speaker 1: the in the household sector. To be compared with the
Speaker 1: financial crisis. The banking sector isn't about to collapse because
Speaker 1: it's running on paper thin levels of capital. There hasn't
Speaker 1: been a splurred in business investment or commercial property building.
Speaker 1: You can't see something which is just going to cause
Speaker 1: the economy to to just implode at the moment. So
Speaker 1: it's just the interest rate effect and people and it's
Speaker 1: really that's that that's what's bearing down on on on
Speaker 1: the growth prospects of the country by taking demand of
Speaker 1: the economy. But the I don't I just don't see
Speaker 1: that as being anything other than this kind of brief,
Speaker 1: shallow recession. So why why is the Bank of England
Speaker 1: being so gloomy? What is it? What's wrong? It's a
Speaker 1: good question, um, I mean, obviously there's been a lot
Speaker 1: on Moyle and I mean, am I like to see
Speaker 1: the ask covering on this? I think that I think
Speaker 1: there is an element to that because you know, there's
Speaker 1: quite a lot of might slang in between the politicians
Speaker 1: in the Bank England during the over the over the
Speaker 1: summer in fact, right, you know, the bean counters, and
Speaker 1: they had also the bank had a very prerogative in
Speaker 1: the in its forecast because at that point Marcus are
Speaker 1: saying rates are going to go to five and a
Speaker 1: half percent, and it wanted to send a very clear
Speaker 1: signal to the markets that you're completely wrong, boys, just
Speaker 1: you're you're just out of the park wrong. So we're
Speaker 1: going to are using your projections, we're going to show
Speaker 1: you that the scale of the recession that that's causing
Speaker 1: is so nonsensical that we're never going to do that.
Speaker 1: So they were just so this is the communication mechanism,
Speaker 1: which seems to be a little bit sort of obtuse
Speaker 1: to have to communicate in this way. But so the
Speaker 1: overstatement of the recession is effectively a way of saying
Speaker 1: it's you know, our rates are never going to go
Speaker 1: that high. That was that was the main point of
Speaker 1: the of the recession. Forecast, which is obviously at the
Speaker 1: same point, telling everyone to prepare for a catastrophic recession
Speaker 1: is not particularly good signaling to the general public. But
Speaker 1: you know that they're kind of thinking about I guess
Speaker 1: thinking about what you said, I mean, over the summer.
Speaker 1: It's kind of feels like a lifetime ago, perhaps, But
Speaker 1: you know, they did have to step in to stop
Speaker 1: the sort of systemic collapse of the pensions industry, you know,
Speaker 1: So the firefighting that happened over the road there from
Speaker 1: where we're sitting, it was real, right, And so maybe
Speaker 1: that explains some of the tricky thing where they had
Speaker 1: to be that forecast kind of between statements as well,
Speaker 1: didn't they saw they weren't really able to take a
Speaker 1: count of what the first school statement may on me.
Speaker 1: And I see there's an element that they've being a
Speaker 1: kind of warning shot across the government's posed in his
Speaker 1: way out of the second point, because they've they've the
Speaker 1: latest bank of the latest rate setting minutes say that
Speaker 1: about a third of the forecast recession has been removed
Speaker 1: by the by the fiscal stimulus in the in the
Speaker 1: autumn statement, right, so it's better already, there's already better.
Speaker 1: So what else could spoil the party next year? John,
Speaker 1: do you think I mean, you know, it sounds like
Speaker 1: we're gonna we're gonna come out of recessions sooner. Inflation
Speaker 1: is already past the peak. You're not worried about anything
Speaker 1: next year? I mean, yeah, I mean think the main ones,
Speaker 1: the energy places. I think it's probably the biggest wiy
Speaker 1: old card, and that could go. That could go two weeks,
Speaker 1: you know, so energy places could follow a lot faster
Speaker 1: than we expect, and that would be great obviously, But equally,
Speaker 1: you know, there's old manner the reasons that you could
Speaker 1: potentially spake in either oil prices or gas bases on
Speaker 1: both um, and that would definitely make things much trickier
Speaker 1: a lot. It does end join employment. I mean, if
Speaker 1: unemployment starts to go up, then I do think to
Speaker 1: an extent all bits out off it could give strange.
Speaker 1: So this recession is this is not an unemployment led recession,
Speaker 1: is it. At the moment, we're still seeing the jobs
Speaker 1: market hold up, and we're seeing those pay increases as
Speaker 1: well that you mentioned. It's it's a bit of an
Speaker 1: odd feeling for recessions that people are keeping their jobs. Yeah,
Speaker 1: at the moment and the at the moment that there's
Speaker 1: still over a million vacancies out there. So the thinking
Speaker 1: is that the companies are just going to stop planning
Speaker 1: to hire people. And so that's that's what you know,
Speaker 1: where the where you can absorb some of the redundancies
Speaker 1: in the in the labor market and also um, you know,
Speaker 1: people as they roll out of jobs, they'll basically just
Speaker 1: retire or leave the country or something, and so that's
Speaker 1: clearly what they're planning. Businesses are not currently planning huge
Speaker 1: redundancy arounds because they're finding it's so hard to hire
Speaker 1: people that the last thing they want to do is
Speaker 1: get this what used to be this incredibly easy asset
Speaker 1: to get hold of, which was a worker, It seems
Speaker 1: to be now incredibly hard to get old of one.
Speaker 1: So you don't want to just just ship them out
Speaker 1: for without without very very very good reason to do that.
Speaker 1: But it's unemployment. The Bank of England's forecast for unemployment
Speaker 1: was in its disastrous scenario, was for a five increasing unemployment,
Speaker 1: which is pretty mild, which is actually exactly precisely is
Speaker 1: it is relatively modern and so that was even under
Speaker 1: its under its bleak scenario The only other thing is
Speaker 1: maybe a and I don't really know how lately or
Speaker 1: unlikely this is, but some sort of sovereign debt crisis
Speaker 1: somewhere somewhere in the world, probably not in Brent. We
Speaker 1: nearly had it, but we're actually not the most vulnerable
Speaker 1: from that point of view. Um, you know, we've our
Speaker 1: debt to GDP is high, but it's not like insanely high.
Speaker 1: I mean, I guess if there was going to be
Speaker 1: something that that would probably adopt in the Euro's own
Speaker 1: because that's the best where it's hardest for them to
Speaker 1: step in and fix it. But even then, I mean,
Speaker 1: the kind of e CV has kind of got a
Speaker 1: license to print money if it needs to and extremists
Speaker 1: that they didn't have in two thousand and eight. So
Speaker 1: I do think maybe a sovereign debt issue, But even
Speaker 1: then that's kind of an outside yeah, And there's so
Speaker 1: the UK is more alone on the kind of of
Speaker 1: strangers than you know, to quote Connie, basically, foreign investors
Speaker 1: are buying our debt um and next year we're issuing
Speaker 1: an absolute glass in this stuff. The Bank of England
Speaker 1: is selling off eight billion will be about forty of
Speaker 1: the guilts it's holding. So basically the Bank in England
Speaker 1: and the Treasury going head to head and trying to
Speaker 1: you know, compete for people to buy their guilts they're
Speaker 1: selling um and that is a huge area of vulnerability
Speaker 1: in the UK. We tested the edges of that didn't
Speaker 1: me in the summer exactly with disastrous exactly so the
Speaker 1: financial so financial stability upset in core markets like you know,
Speaker 1: government bonds um. That genuinely could be one of those
Speaker 1: kind of complete left field shocks. You know, obviously Ukraine
Speaker 1: and Russia, that whole situation escalating UM and you know,
Speaker 1: some terrible geopolitical mess with China or that that kind
Speaker 1: of stuff could all that. But but of the sort
Speaker 1: of more visible possibilities, the financial, the financial stability issues
Speaker 1: which come with issuing so much debt next that next year,
Speaker 1: that that could be that could be one of our
Speaker 1: Achilles heals. And the politically, just to kind of maybe
Speaker 1: wrap up, you know, where do we see this government
Speaker 1: headed next year? Are we going to make it through
Speaker 1: the whole of next year without having an election? I mean,
Speaker 1: can sooner keep this Conservative administration together? Unruly like they
Speaker 1: don't only manage the Tories that it's um, you know,
Speaker 1: he he's had to scrap his his planning reforms temporarily
Speaker 1: because they're pretty they're completely unpitable, don't the moment exactly
Speaker 1: I mean that. So if he I mean that, I can't.
Speaker 1: I think if they can't get the business of government working,
Speaker 1: then it's hard to see how there can't be an
Speaker 1: election next year. But they're also the Tories are incredibly
Speaker 1: apt at survival and you know, the idea that they're
Speaker 1: going to kind of self sabotage themselves. Basically. One thing
Speaker 1: to think about there is if the election is called,
Speaker 1: not until they're very late potentially um. And by that point,
Speaker 1: I mean to your point about you know, wages have
Speaker 1: risen to the level of wages has gone up, and
Speaker 1: at that point you may see inflation just through you know,
Speaker 1: the mechanism of energy prices falling, etcetera. And may see
Speaker 1: inflation below zero temporarily or around zero and it would
Speaker 1: just be a temporary thing. Um. And so you you
Speaker 1: would have this, you know, this wedge opening up where
Speaker 1: people are definitely seeing pay rises larger than inflation. There
Speaker 1: would be there could be a period of you know,
Speaker 1: if if growth is recovered um, you know, we would
Speaker 1: have had eighteen twenty four months to try and fix
Speaker 1: some of these immigration issues, sort out some of the
Speaker 1: Northern Ireland partnership stuff and which could then get get
Speaker 1: a little bit of more economic momentum going. You know,
Speaker 1: you could you can see that gap narrowing to get
Speaker 1: to get pretty tight if people are feeling at that
Speaker 1: point point in time, you know the the you know,
Speaker 1: their earnings are paying for more. Um. You know that
Speaker 1: they're not seeing real terms declines in the new standards
Speaker 1: at that point, and they can afford a house right
Speaker 1: because it's going to be cheaper than it was, right.
Speaker 1: So it's a sunnit uplands. I don't know how we've
Speaker 1: ended up there the opposite of the Bank of England
Speaker 1: around here, right. This is just going to talk the
Speaker 1: British economy up right. Well, thank you so much to
Speaker 1: John Stepec and Phil Audric. Thank you thanks for listening
Speaker 1: to this week's in the City. We'll be back next week,
Speaker 1: but in the meantime, if you like our show, please
Speaker 1: head on over to Apple Podcasts or wherever you listen
Speaker 1: to podcasts and rate, review and subscribe. This episode was
Speaker 1: hosted by me David merrit was produced by Summer Sadi
Speaker 1: editing and sound designed by Blake Maple's Special thanks to
Speaker 1: John stepec And foril AUDERIC, and be sure to check
Speaker 1: out John's news letter, Money Distilled