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An Olympic task for the government

Sarah Davidson

May 22, 2012

Gemma Harle is managing director of TenetLime

 

This summer will see plenty of personal bests, gold medals, and records but getting the UK economy, and specifically the mortgage market, back on track remains an Olympian task requiring a champion. The torch may have landed but there is little sign of any fire in the housing or broader economy.

 

Of course, it’s been argued that Britain’s struggling economy will receive a much-needed boost from the Olympic Games this summer as more tourism and extra public spending lead to increased activity that could spell the end of the double dip recession.

 

However for many of us it’s hard to escape the feeling that any benefit to the economy from foreign sports fans or Britons stocking up on beer and mascots is likely to be short-lived. Indeed moving domestic spending around is much like moving an oil slick around. The size remains the same it’s just soaked up in different places. This may benefit the supermarkets but it’s unlikely to do much for financial services products other than credit cards.

 

When the dust has settled after the Jubilee and Olympics we will require a new set of initiatives to get the UK housing market going again. It’s not all in the government’s gift and the chosen path of monetary rather than fiscal policy to help home owners means there is little likely to be offered in terms of tax or spend measures in the near term.

 

But by then we will be more certain about the course of Europe and whether austerity can co-exist with growth measures in a manner that the markets can believe.

 

Grant Shapps is our current Team GB hopeful for housing but I suspect he like many others can’t wait for the diversion of the Olympics. Many politicians, policy makers and the UK mortgage industry luminaries, think just keeping the industry on the track could be worth a gold medal.


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