In a masterly FT Weekend comment piece, Janan Ganesh analyses Labour economic policy. He argues Labour’s main challenge ahead of 2015 is to prove their fiscal bona fides without accepting the coalition’s squeeze on low incomes. The party took a walk towards economic credibility this week by admitting it would implement a similar style of fiscal austerity to the coalition. It also said it would not reverse the coalition’s abolishment of universal child credit. Austerity goes against Miliband’s ideological creed, but will be accepted as a necessary evil in the end-game of returning the party to power.
In his regular FT Money column, Jonathan Eley dissects Help to Buy – the government scheme allowing buyers to borrow up to 20% of the cost the property from the taxpayer –arguing it will inflate house prices, fatten housebuilders margins, and be of little real help to high LTV borrowers. He references data from LSL Property Services showing first-time buyer numbers rose 15% in April, but points out that Bank of England mortgage data shows remortgaging activity is rising more consistently than purchases. Eley warns low mortgage rates and a wider choice of mortgages have disproportionately favoured low LTV borrowers, and says banks will still be reluctant to lend to high LTV borrowers en masse.
Employment, HR and recruitment
The US labour market showed signs of improvement in May, with a report on Friday showing a better-than-forecast 175,000 jobs were created over the month. The unemployment rate increased slightly from 7.5% to 7.6% because more people are returning to the labour market and looking for jobs, a positive sign that underscores the narrative of recovery.
In the Telegraph’s property section, Max Davidson looks at the return of auction selling. He argues the difficulty in selling homes outside of Greater London means more estate agents are auctioning properties, rather than marketing them in a traditional way. His piece comes off the back of Knight Frank’s announcement that it will be holding its first auction in South West for nearly 10 years.