Cost of Living and mini budget questions.

[sparklecement]

So everything seems to have gone boom since the mini budget last Friday. I try to keep informed but a question for anyone who knows more than me, did the government completely blow it on Friday, given what’s happened to the pound and also the fact that the Bank of England are now taking about increasing interest rates again? Basically, any savings from Friday are gone with an interest rate rise? I see that many lenders have withdrawn products for mortgages today too.

We don’t benefit from the tax reduction in Scotland so I have sort of switched off for a few days. I woke up this morning watching the news as we are going to America in January!

Would the government stand up (I suspect not) and say we got it wrong? Have they made a complete and utter mess of trying to help and it’s backfired?

Trying to understand a little better.

Wondering if anyone has any thoughts?

Bank of England is essentially calling their bluff and forcing a backtrack. Expect most of the mini-budget changes not to be implemented, or to be deferred. Hopefully that will be enough to give the markets some confidence.

Its quite worrying situation and because of country debt and high inflation, i dont know tbh if there is any solution to it. I am not expert but dreading this uncertainty.
I highly doubt Government will say Sorry we got it wrong but I can certainly see BoE will be putting rate high asap

Yep they blew it. The increase in salary will go to cover our increase mortgage costs. So we have the same spending power

which is not what the BoE want. The markets are worried about govt borrowing costs so cost of borrowing has gone up for the govt.

its a complete mess - especially as most of the inflation is down to energy costs and not consumer spending

The increase in interest rate rises was predicted before the budget and is still roughly in line. The budget wasn't an attempt to deal with inflation or energy costs. It was to try to avert the catastrophe that may be about to happen when wealthy families default on very large mortgages by putting £1000s into the pocket of those who might suddenly end up paying £3k more per month on a million pound mortgage. A collapse at that end of the market would surely crash the whole system. Note that the other tax giveaway barely reported was cuts to stamp duty, which they only tend to do when they're worried about the housing market.

Thank you everyone.

Thanks @Magnanimouse that's the best and most reasonable explanation I've heard this week to explain what seems like ludicrously unfair decisions made this week.

The whole situation is f*cked up!!

Yes they blew it and whilst this might have been designed to support wealthy families not default on mortgages, it is also economic theory put into practice of how to stimulate ‘growth’. Problem with that (aside from everyone agreeing trickle down economics doesn’t work) is you don’t get growth overnight so it will be literally months and months before anyone could say whether that has been a success or not.

Add in major productivity issues due to COVID and a war causing energy hikes and materials scarcity, I don’t think economic growth was the variable to look at.

I believe the phrase is shit the money bed.

Magnanimouse I'm not sure that makes sense. If wealthy millionaire people default on a mortgage then they can buy a cheaper property, maybe outright, or move to the rental market. The wealthy are only what 1 percent. I don't think it is so critical to keep them in their mansions that the fiscal policy is designed to do just that, with the "acceptable" side effect that maybe 20 to 30 percent of the population are totally annihilated by the interest rate rises, potentially forcing a high percentage of mid to low and even some mid to high income households into poverty/ house repossession. Sorry, I think it's a clusterfuck move and not a planned approach to help out those on millionaires row.