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The working and middle classes in the UK have had a lost decade really. 2008 crash followed by austerity going on for way too long when it wasn't needed at all

The working and middle classes in the UK have had a lost decade really. 2008 crash followed by austerity going on for way too long when it wasn't needed at all, followed by Brexit, Covid and now this.

mytailorisrich 4y ago
The middle class enjoyed a decade of extremely low interest rates on their mortgages. Covid has been a mixed bag and it has really depended on what sort of job you had. Many in the middle class have office jobs that 'just' moved to WFH and all those people actually benefited financially from the situation (cost of commute disappeared overnight). I don't think many people have felt any change following Brexit so far... NOW is the rude awakening: Prices up, interest rates up, back to office. Perfect storm on personal finances. Whilst unemployment is at record low it is predicted to go up as well.
- KptMarchewa 4y ago
  Low interest rates on mortgages means the principal is higher due to astronomical prices. Expanded access to credit just makes prices rise.
  - mytailorisrich 4y ago
    It's audacious to try claim that historically low interest rates have been bad for people with mortgages (which is most of the UK's middle class).
    - patrickthebold 4y ago
      Not gp, but it seems clear to me that that low interest rates are bad for new home buyers, and only good for people holding mortgages as they drop. That might be what you and gp both mean.
      - mytailorisrich 4y ago
        > but it seems clear to me that that low interest rates are bad for new home buyers Well no. Low rates are by definition good for everyone who borrows money. Edit: There is a strange assumption it seems that low rates are the cause of the increase in property prices and that there is essentially a bubble. If the banks accept to lend then low rates do allow people to borrow more, but claiming that high rates would be "better" or that this causes unreasonably "inflated" prices are a few steps too far. Higher rates are not going to help you if you want to get onto the property ladder, and they are not going to help either if you are already on it.
        patrickthebold 4y ago
        When buying a home, people care about the total amount of money they will spend. They do not particularly care if the seller or the bank gets their money. If 'the market' decides a property is worth 3000/month, interests rates directly impact the selling price of the home. Of course, I'm playing a trick by having the market price the monthly mortgage payment, and not price the property. Some people aren't going to take a mortgage so they care about the selling price only. But I'd argue that most people care about their monthly payment. Now compare two scenarios: You by a home for 3000/month mortgage with a high interest rate, then rates drop. You by the same home for 3000/month mortgage with a low interest rate, then they rise. In the first case, you can either refinance if you rate was fixed, or if it's adjustable your monthly payment drops. Any your home value goes up for the reason already mentioned. In the second case, if it's fixed, that's good, but you lose that rate if you sell,if its adjustable your monthly payment goes up. And your home value goes down for the reason already mentioned.
        LilBytes 4y ago
        Except the asset you're buying from low interest rates has balooned in value meaning your purchasing power still went significantly backwards.
        KptMarchewa 4y ago
        It's not a stretch to claim that loose, expansionary monetary policy causes asset bubbles.
  - bennyelv 4y ago
    Absolutely right, there isn't the usual balance of supply and demand setting the price with housing. There's massively constrained supply, with ever growing demand, for a basic need that isn't optional (shelter). This means that the price is set by how much each potential buyer is able to borrow.
- richliss 4y ago
  Low interest rates combined with a massive shortfall in house building and add in help to buy and those rates were low for a massively inflated initial asset. Plenty of people who are middle class got furloughed or let go during Covid. Pretty much everyone I knew who were contractors were let go. Brexit had an impact before the vote and immediately after the vote because inbound investments were paused, some HQ's were moved to different locations and the pound dropped in value. I'm not taking into account post actual leaving the EU because it's too complex to disconnect the impact from everything else going on. Now we have a tidal wave heading towards us. Most working and middle class people just don't understand how bad it will get for some of them. Those that worked during covid, saved up and then didn't spend it all post lockdown will probably be ok. The others? Not so much once share prices crash and the boards of directors start making layoffs to get the share prices to rise and to make sure their portfolios are ok. I'm expecting riots like Brixton, Handsworth etc. again in the UK.
- jen20 4y ago
  The UK does not have fixed rate mortgages like that. If you don’t think Brexit is the root cause of inflation in the UK I don’t even know what to tell you.
  - cloutchaser 4y ago
    I hate to tell you this, but many countries that didn't Brexit also have inflation right now... Did you check the baltics? Close to 20%. Did they Brexit?
    - jen20 4y ago
      No, they had Russia invade Ukraine on their borders. The Baltics have had several inflationary shocks even during the “good” times - not least when joining the Euro, everything jumped in price by 30-50%.
      - cloutchaser 4y ago
        Thanks, I know that, and I was replying to the guy saying inflation is because of brexit. At least Biden is saying inflation is because of Putin, that’s one step less of a ridiculous statement, albeit still wrong.
    - mytailorisrich 4y ago
      Inflation is in the same ballpark in the UK, Eurozone, and US... Clearly if Brexit has any impact it is indeed small at the moment.
      - jen20 4y ago
        2% above the more reasonable parts of the Eurozone is not a small impact for everyday people - especially not those who have “done the right thing” and have savings.
Ndjdkkdmdmjf 4y ago
[flagged]
- dang 4y ago
  We don't want ideological flamewar or unsubstantive comments here, and have banned this account. Please don't create accounts to break the site guidelines with. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- happymellon 4y ago
  Liberals supported COVID?
  - dempseye 4y ago
    They supported radical state interventions against covid that affected the economy and forced central banks to run the money printer. Lockdowns, etc.
    - happymellon 4y ago
      Ah, gotcha. Although I don't know any liberals that supported Brexit, that was conservatives that wanted rid of red tape (pesky regulations like maximum working hours) and unions that wanted more red tape than the EU would allow. Unfortunately for the Unions, they voted for Brexit but aren't in control. Unions are not the same as liberals.
  - guiriduro 4y ago
    or Brexit?
    - happymellon 4y ago
      Liberals didn't support Brexit. Generally everyone I know acknowledged that the UK was better off in the EU or while there may be flaws in EU policy at times, the chances of the UK government doing anything better was so unlikely that they couldn't support Brexit out of principal. As has shown, most people's concerns that Tories are terrible at handling government policy have been well founded. We shall see if Boris gets evicted before the next GE, we should be on a roll then if not a single PM has lasted a full term for a decade?
mmarq 4y ago
The real issue in the UK is not austerity, but that since 2008 it has been ruled by governments that actively harmed its productivity growth, eventually leading to the current cost of living crisis. Today real wages are below 2007.

mytailorisrich 4y ago

The middle class enjoyed a decade of extremely low interest rates on their mortgages. Covid has been a mixed bag and it has really depended on what sort of job you had. Many in the middle class have office jobs that 'just' moved to WFH and all those people actually benefited financially from the situation (cost of commute disappeared overnight). I don't think many people have felt any change following Brexit so far... NOW is the rude awakening: Prices up, interest rates up, back to office. Perfect storm on personal finances. Whilst unemployment is at record low it is predicted to go up as well.

KptMarchewa 4y ago
Low interest rates on mortgages means the principal is higher due to astronomical prices. Expanded access to credit just makes prices rise.
- mytailorisrich 4y ago
  It's audacious to try claim that historically low interest rates have been bad for people with mortgages (which is most of the UK's middle class).
  - patrickthebold 4y ago
    Not gp, but it seems clear to me that that low interest rates are bad for new home buyers, and only good for people holding mortgages as they drop. That might be what you and gp both mean.
    - mytailorisrich 4y ago
      > but it seems clear to me that that low interest rates are bad for new home buyers Well no. Low rates are by definition good for everyone who borrows money. Edit: There is a strange assumption it seems that low rates are the cause of the increase in property prices and that there is essentially a bubble. If the banks accept to lend then low rates do allow people to borrow more, but claiming that high rates would be "better" or that this causes unreasonably "inflated" prices are a few steps too far. Higher rates are not going to help you if you want to get onto the property ladder, and they are not going to help either if you are already on it.
      - patrickthebold 4y ago
        When buying a home, people care about the total amount of money they will spend. They do not particularly care if the seller or the bank gets their money. If 'the market' decides a property is worth 3000/month, interests rates directly impact the selling price of the home. Of course, I'm playing a trick by having the market price the monthly mortgage payment, and not price the property. Some people aren't going to take a mortgage so they care about the selling price only. But I'd argue that most people care about their monthly payment. Now compare two scenarios: You by a home for 3000/month mortgage with a high interest rate, then rates drop. You by the same home for 3000/month mortgage with a low interest rate, then they rise. In the first case, you can either refinance if you rate was fixed, or if it's adjustable your monthly payment drops. Any your home value goes up for the reason already mentioned. In the second case, if it's fixed, that's good, but you lose that rate if you sell,if its adjustable your monthly payment goes up. And your home value goes down for the reason already mentioned.
      - LilBytes 4y ago
        Except the asset you're buying from low interest rates has balooned in value meaning your purchasing power still went significantly backwards.
      - KptMarchewa 4y ago
        It's not a stretch to claim that loose, expansionary monetary policy causes asset bubbles.
- bennyelv 4y ago
  Absolutely right, there isn't the usual balance of supply and demand setting the price with housing. There's massively constrained supply, with ever growing demand, for a basic need that isn't optional (shelter). This means that the price is set by how much each potential buyer is able to borrow.
richliss 4y ago
Low interest rates combined with a massive shortfall in house building and add in help to buy and those rates were low for a massively inflated initial asset. Plenty of people who are middle class got furloughed or let go during Covid. Pretty much everyone I knew who were contractors were let go. Brexit had an impact before the vote and immediately after the vote because inbound investments were paused, some HQ's were moved to different locations and the pound dropped in value. I'm not taking into account post actual leaving the EU because it's too complex to disconnect the impact from everything else going on. Now we have a tidal wave heading towards us. Most working and middle class people just don't understand how bad it will get for some of them. Those that worked during covid, saved up and then didn't spend it all post lockdown will probably be ok. The others? Not so much once share prices crash and the boards of directors start making layoffs to get the share prices to rise and to make sure their portfolios are ok. I'm expecting riots like Brixton, Handsworth etc. again in the UK.
jen20 4y ago
The UK does not have fixed rate mortgages like that. If you don’t think Brexit is the root cause of inflation in the UK I don’t even know what to tell you.
- cloutchaser 4y ago
  I hate to tell you this, but many countries that didn't Brexit also have inflation right now... Did you check the baltics? Close to 20%. Did they Brexit?
  - jen20 4y ago
    No, they had Russia invade Ukraine on their borders. The Baltics have had several inflationary shocks even during the “good” times - not least when joining the Euro, everything jumped in price by 30-50%.
    - cloutchaser 4y ago
      Thanks, I know that, and I was replying to the guy saying inflation is because of brexit. At least Biden is saying inflation is because of Putin, that’s one step less of a ridiculous statement, albeit still wrong.
  - mytailorisrich 4y ago
    Inflation is in the same ballpark in the UK, Eurozone, and US... Clearly if Brexit has any impact it is indeed small at the moment.
    - jen20 4y ago
      2% above the more reasonable parts of the Eurozone is not a small impact for everyday people - especially not those who have “done the right thing” and have savings.

Ndjdkkdmdmjf 4y ago

[flagged]

dang 4y ago
We don't want ideological flamewar or unsubstantive comments here, and have banned this account. Please don't create accounts to break the site guidelines with. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
happymellon 4y ago
Liberals supported COVID?
- dempseye 4y ago
  They supported radical state interventions against covid that affected the economy and forced central banks to run the money printer. Lockdowns, etc.
  - happymellon 4y ago
    Ah, gotcha. Although I don't know any liberals that supported Brexit, that was conservatives that wanted rid of red tape (pesky regulations like maximum working hours) and unions that wanted more red tape than the EU would allow. Unfortunately for the Unions, they voted for Brexit but aren't in control. Unions are not the same as liberals.
- guiriduro 4y ago
  or Brexit?
  - happymellon 4y ago
    Liberals didn't support Brexit. Generally everyone I know acknowledged that the UK was better off in the EU or while there may be flaws in EU policy at times, the chances of the UK government doing anything better was so unlikely that they couldn't support Brexit out of principal. As has shown, most people's concerns that Tories are terrible at handling government policy have been well founded. We shall see if Boris gets evicted before the next GE, we should be on a roll then if not a single PM has lasted a full term for a decade?

mmarq 4y ago

The real issue in the UK is not austerity, but that since 2008 it has been ruled by governments that actively harmed its productivity growth, eventually leading to the current cost of living crisis. Today real wages are below 2007.