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I suspect real world actual figures for individual properties are worse than the Halifax averages. I have several flats bought more than five years ago in a mid 1990's low rise development and have monitored actual selling price of all properties in the development since 2000. The peak price obtained was in Spring 2007 when one flat was sold for 拢180,000. When I tried to sell an identical flat for 拢135,000 in Autumn 2007 I got no takers. That's a drop of 拢45,000 or 25%, a big loss for the person who bought at the market peak last year!

Rather than asking "what, if anything, can the government do?" about house prices, we should be asking "what, if anything, SHOULD the government do?".

Prices in the housing market were distorted by cheap credt. A drop in prices is something we should welcome as it's high time they were reflective of peoples incomes, rather than borrowing their power.

I think, your comment on the meeting with the Prime Minister helps people understand and develop a more relaxed attitude. Both good and bad happens and we have to deal with that as we find it, and the Prime Minister's approach neatly encapsulates that. The Prime Minister's view seems to coincide with my own. That's pretty interesting from a personal perspective.

The periods of fear and greed, asset stripping and consumerism, or the Thatcher and Blair years are yesterday. The Prime Minister's approach is today, and much more precise, balanced, and long-term. As his leadership approach begins to gain traction I'm sure more extreme views will boil off and a more centred approach will develop. The boy's doing well.

I am concerned that so much British output is tat and crime is high but if government, business, and society can build on the foundation the Prime Minister is laying, I'm generally optimistic that the sort of country that built the Lightening jet and National Health Service can emerge from the ashes. Far from being a disappointment we may exceed our ancestors expectations.

All Hail Blessed Leader!

Dear Nick,
I think Gordon Brown has put his head in the sand on the issue of the credit crunch. With regard to the mortage situation, it is clear the reason there are problems in the market is becuase all the lenders are filling the hole northern rock has created. Most borrowing at the present is remortgage which means the money is being past around ie no new money is requiredunless it is coming from NR. Many lenders are making money out of this situation and it is this area Gordon Brown should be concentrating on if he has any contribution to make with these problems.By the way I am a mortgage Broker I can see what's going on and in my view the FSA has a lot to answer for,for their complete lack of forsight.The FSA has not look after the consumer and allowed lender after lender to withdraw products that is creating more problems to the customer but not the lender. The lenders are improving the quality of their business at the cost of everything else.All the lenders I deal with have so much busines at the moment they can not cope with the volume, and remember this new busines is with lower risks and improved margins.
Many Thanks - John
ps- keep up the work.

I'm not an expert at all but as a first time buyer I am delighted house prices are going down. Surely if I have a deposit and good credit the banks will still lend to me? Why is it beneficial for house prices to be high when so many people can't afford to get on the ladder?.

Sorry to be so negative, in general I enjoy your blog, but is what you have written above even newsworthy, why did you even bother meeting him to get those standard pat comments !?

I wonder whether the drop in the housing market is more serious than "economists/politicians" are hoping/suggesting?
I seem to recall that when the stock market fell in the late 1990's house prices rocketed. One of the reasons offered for this increase was that investors were turning away from stocks and were investing in land instead, further fuelling these increases.
Presumably some of these investors are pension companies and the like. Furthermore, a lot of homeowners bought second properties for the buy to let market.
If it is seen that pension companies's investments are going to be affected (again!) and that the private "buy to let" entrepreneur are going to be overstretched then the economy will, I feel suffer more seriously than predicted.

To be honest, I do not know what to make of the press reports concerning the housing market, whether it be a
slowdown, decline or crash. The latter would of course be a blow to the UK economy, although I read that this is considered unlikely in every quarter. The other two, however, appears to be dividing opinion and I guess only time will tell. Waiting for the passing of time, is exactly what concerns me. I purchase my first property in April last year. Like alot of people I suspect, I took advantage of the 100%+ mortgages on offer at the time. Reports of housing prices decline sends an immediate shiver down my spine and the fear of the words "negative equity" spring to mind. I ask then, what will be done to prevent (if so far a possible) the decline and, if it turns out to be the case that poeple such as myself joined the housing market at a very "unfortunate" time, what (if anything) will be done to aid my circumstances (and others like me) - will the proposals to assist first time buyers extend to those who purchased properties (for the first time) 'just' before the credit crunch fallout and have felt its effects more accutely than the majority? - perhaps, again, only time will tell!

He can't speak about elections. He's an unelected PM...And we can't speak about Zim election fraud seeing we have so much postal voting fraud.

The Dianan inquest - his Government wasted the money.. cheek to suggest it should stop. What about the 拢100M + Bloody Sunday Enquiry

Lets face it, Brown inherited an emerging recovery from the tories.

Since Labour came to power, house prices have tripled, the general cost of living has risen, my poll tax in particular wnent up 26% between 2000-2006.

He has allowed the benefit system to spiral out of control in terms of cost.

He sold gold reserves at a ridiculous price.

And to top it, he has taxed and spent like money was going out of fashion.

His luck has now run out and he and Darling are lost for answers.

I believe the government is in denial about the state of the british
economy. There is a problem and it is
not being addressed correctly, the government and bank of england are sitting on their hands and doing absolutely nothing to stave off a recession. Its no good keep saying its because of USA's credit problems.

Here is a Man who is leading our Country who refuses to acknowledge what other World Economists see as a problem.

A Man who has conned his own party into believing that such things as taking money from the less well off by means of a TAX CON does not impose a problem for them.

A Man who uses Tax Payers money to clean his " OTHER HOME " as well as other outlandish expenditure.

Lets hope we do the deed in May and also the General Election and KICK HIM and NEW LABOUR OUT OF POWER

Unfortunately we seem to sleepwalking onto the edge of the precipice, if not into disaster, under this unelected, bury-my-head-in-the-sand-and-hope-it-all-goes-away, PM. Reposessions are rising, inflation seems to be escalating and the country has absolutely no room for manoeuvre thanks to the former Chancellor's deeply flawed policies and lack of vision.

I'd be interested to hear your thoughts on this matter Nick.

At the end of the day, it's obvious that Mr Brown will keep saying "we're ok" or words to that effect as to concede a problem this close to the local elections would be suicidal for his party's chances in retaining any kind of voter respect.

As for the Chinese issue, as far as I am concerned (as with Zimbabwe) we cannot do anything at all other than make rhetoric as these incidents are within a sovereign state and therefore out of international jurisdiction unless the UN security council makes some kind of resolution.

I feel for the people in these countries and am grateful at my own circumstances. However, there is a limit to what the international community can do until an international consensus is achieved.

As the next Olympic Hosts, I think our PM Gordon Brown has a real problem if he wants to join in the attack on China. As a country with the shame of Iraq on our shoulders- pot and kettle comes to mind as well

Yet another example of the arrogant Brown stance.'It's nothing to do with me mate' echoes around Downing Street with infuriating consistency no matter who is poking their face through the door of No.10

Well of course he won't admit anything.

He's used a Tory bequest of 11 years of a strong economy and spouted this at any and every turn over the last decade.

This is Labour's 1976 - or at least I hope it will be. I want the smugness wiped. I hope the next election will produce Thatcher's '79.

The economy is the one thing this Government can cling to as the ship founders.

Unbeleiveable!

The very man who took credit for the Global boom is now blaming the Global depression on everyone else and is in denial that his policies are destroying this country.

Thankyou for making this interview - as it hits the nail right on the head and it lets the British people know that Gordon Brown really is losing the plot and is in denial. Surely he cannot beleive his own propaganda?

The very man who would take credit for the extra hours sleep when the clocks went back an hour is blaming everyone else but himself!

"Crisis? What crisis" - we have heard this all before!

Gordon needs slapping round the face with a wet kipper! And we need a general election!

I think the PM is actually going mad. 'We cut the income tax to the lowest rate for 75 years.' Yes, he did but then abolished the 10% starting rate! All for a cheap headline. Does he really think that people don't see through this guff?

The tragedy is that he's getting to be just like John Major - nice enough bloke but not really up to the job. With his comedic antics over the Olympic torch, his getting lost at Windsor, the make-up mark on his forehead and everything else, he's reached the point that people don't dislike him; they just feel sorry for him. And once people start thiking that, you are stuffed politically.

If Mr Brown believes: ''Gordon Brown has said the UK is well placed to deal with global economic crises, after figures showed a sharp decline in house prices''. Why have the currency markets battered Sterling??
Perhaps their view is that the UK can no longer live on borrowings nor support the massive influx of immigrants that Mr Brown (wrongly) beleives add value to the Economy.

I think you have to be careful to label the house price data 'grim'.

By all accounts and all (sensible) measures house prices are overvalued compared to earnings, affordability and rental values/yields.

A correction has to take place unless no one under 35 who doesn't work for a bank will ever be able to afford to own there own home and do other important things like - say - raise a family.

IF we can see values drift down without a huge recession then 1-3% per quarter for the next couple of years would be a great escape worthy of Houdini.

It is no use calling for the Zimbabwe election results to be published as whatever they are, they will be rigged. What we need to call for is Dictator Mugabe to step down.

Denial? of course he is in denial - as are the rest of his cronies in the New-Labour consipiracy ever since they achieved power in 1997.

Having inherited the strongest, most thriving economy in modern history, and under Brown's guiding hand, they have squandered that inheritance and have compounded their incompetence by borrowing way over their means to fund their socio-political-engineering ambitions to ruin the country's formerly much respected institutions.

With no real-life and real world-work experience under any of their collective belts since graduating from their universities, this pettyfogging, mean-minded bunch of control-freaks have done their level best to ruin this country for their own spiteful little ends and have brought it to its lowest level since the end of the dark ages.

The sooner the voting populace of this country wakes up from its somnambulistic walk to oblivion, brought on by a diet of lies, false statistics and spin and gets rid of Brown and the rest, the better will be our chances of surviving the impending world economic collapse.

Oh, and next time ask me what I really think!

Nick
Clearly Gordon is either very ill informed about the state of the British economy or is in serious denial! My partner & I have a small business within the construction industry and since the beginning of the year have had to make 40% of our staff redundant as a direct result of the credit crunch and the now almost non existant sale of new homes (we work for most of the major house builders). Not only that but recently we have heard that the housebuilders themselves have been laying off site agents and other staff, stopping production on site of not only houses for sale to the public but also houses being built for housing associations. Does Mr Brown seriously think that this situation is not going to spiral out and seriously affect other areas of the economy? How can he not be seriously concerned, especially when combined with the huge increases in energy and food and fuel prices that have happened over the last few months?

If Mr Brown believes: ''Gordon Brown has said the UK is well placed to deal with global economic crises, after figures showed a sharp decline in house prices''. Why have the currency markets battered Sterling??
Perhaps their view is that the UK can no longer live on borrowings nor support the massive influx of immigrants that Mr Brown (wrongly) beleives add value to the Economy.

Was Brown's head still buried in the sand when you interviewed him? It's amazing how everybody in Britain knows the country is on the verge of economic disaster except the" son of the manse" and his pet chancellor who appear to be in total denial.

Has he not seen the latest poll?
He should be gloomy.

"Because we've got low inflation we can cut interest rates, because we have had low debt, we can afford to keep our public spending programme in line" Gordon Brown

I assume this is from someone sharing Brown's name but running a different country, because I certaintly don't recognize this as the UK...

"Because we've got low inflation we can cut interest rates, because we have had low debt, we can afford to keep our public spending programme in line" Gordon Brown

I assume this is from someone sharing Brown's name but running a different country, because I certaintly don't recognize this as the UK...

Nick, its hard to ask someone who for so long has been in denial about the true state of the economy and the damage he alone has generated, to confirm whether he is in denial. To suggest that borrowings are low when they have never been higher and government borrowing would be off the richter scale had it not been for all the off balance sheet PPI work. Thsi man decent fellow as he may be is truly living in la la land. Perhaps we have now reached teh stage where the lunatics are indeed running the asylum

Mr Brown is indeed in denial. Inflation under control. i do not know anyone whose monthly outgoings are merely 3% higher. Try 8% and youll be close to the truth.
When the economy and the country was flying ahead a few years ago Mr Brown didnt at any point state that this was due to the US economy doing so well, yet as soon as this ridiculous sub-prime cover up came about and the economy falters its all to do with the USA.
Strange that in the USA of the 55Million mortgages, 51million are being serviced fully and only 4 million are in default. Are we really so gullible that two powerhouse economies are so fragile that 4 million mortgages can do so much damage. The real reason is the greed and dubious accounting and financial practices of the major financial institutions and their offshore SPV's (special purpose vehicles) that were set up to basically defraud the stock investors.

I wonder if those people who say "the government should do something" are the same people who complain about big government and are always grumbling about what the government actually does. If you aren't happy, get involved - join a political party and get elected to office. We get the politicians we deserve. 20-20 hindsight is a wonderful thing. Anyone who wants a really incompetent and fraudulent government should go to Zimbabwe and see how they do it.

The Credit Crunch is most visible when it comes to the housing market, however it is also affecting businesses, who contribute jobs and taxes to the economy. It will not take long for unemployment to throw up it's ugly head if SMEs start to go bang over the next year.

As for house prices, prime assets are safe, it is speculative property that is taking the hit, hence the big drops in modern city center apartments. This is because the only rationale for buying them in the last five years was the potential for growth, they haven't 'washed their face' for a very long time as investments.

People still want property, and want to buy. It really is a case that the cupboard is bare when it comes to borrowing. It needs to fixed quickly before it becomes a spiral. The Banks are taking advantage by jacking up margins, which is hardly treating customers fairly. When will the FSA step in to uphold this principle?

GB is living on some strange delusional planet if he thinks inflation is under control and there is lots of room for interest cuts. We are well and truly painted into the corner he chose for us.

Nick, this is boring...where is your cutting edge journalism of the political game he is playing?
The unsustainability of this housing boom was obvious even to vicars, astrophysicists and manicurists by 2002. Why wasn't it stopped then? Who was in charge of the Treasury and the government's economic policy since 1997? Do I care about, or would I trust, what Gordon Brown has to say today, even though it has been obvious since the dot-com boom that he loves taking credit instead of responsibility, and has obviously helped the masses to do the same?

How long can Brown keep up with this mantra before people start openly questioning his sanity.

UK plc is perched above a precipitous fall and the housing market is dragging it off the cliff.

When proof becomes incontrovertible it will of course be due to the global conditions we couldnt forsee (that is apart from many of us).

When are the government and the Housing industry going to be honest with us?

The Housing market is on the rocks. The average price of a house is apparently about 189,000. If the average salary is 拢25000/year, how is the first time buyer ever going to get their foot on the ladder? Answer: they can't.

But the market can't "stop". It will have to correct itself and that means prices have to fall back within reach of the people at the bottom of the ladder.

Making deposits 25%+ will make life even more difficult and will hasten the fall in prices. After all, if no one comes onto the bottom of the ladder, the rest can't move up.

Part buy schemes and 拢60,000 sheds aren't going to fix this. There is only one way, and that is the painful one.

If the industry were more honest, and some other people were less greedy, we would avoid these peaks and troughs!

How about treating houses as homes instead of a quick buck for the greedy?

How long can Brown keep up with this mantra before people start openly questioning his sanity.

UK plc is perched above a precipitous fall and the housing market is dragging it off the cliff.

When proof becomes incontrovertible it will of course be due to the global conditions we couldnt forsee (which is not true).

Anyone who now doesn't think there is going to be a collapse in the housing market is probably certifiable!

House prices has been too high for too long. Just as the crazy confidence in ever larger house prices fueled the surge, so will the ever worsening news coming from the money lenders and government figures make the market increasingly worried.

The credit crunch will simply do the rest. The Japanese central bank reduced their base rate to 0% and their housing market has been in the doldrums for over a decade. This could well be worse than the 80s crash, for a range of diferent reasons, including the sub prime market in THIS country (125% mortgages for buy to lets and amateur property developers to spend on already over valued houses, really was that sort of money lending prudent?)

"Best chancellor since the war my ar*e!" This is the man that just made 5.3 million of the poorest members of society worse off!

And by the way Mr Robinson, surely our license fees would pay for some more pointed questioning of the most powerful man in the country (Mr "No more boom and bust"), or are you waiting for the right time to really stick the knife in (won't be hard soon).

What odds do you think I'd get for a change of prime minister BEFORE the next general election!

I thought that those in the know said that we will be lucky to have a recession & not go into depression!

I feel many of you have missed the point with the PM's response to admittedly bad news for the housing market today. There have been doom mongerer's in the city predicting how bad it will be for some time now since the emergence of a slow-down in the housing market, but contrastingly, there are some who feel this will all go away and no damage will be done.

Did anyone expect the PM to do anything but steady the ship? Saying he was going to leap into action, or "keeping his head in the sand" as has been suggested would cause further damage to the situation, not to mention more sensationalist headlines.

No government can make immediate and sweeping movements to stop something like this happening, potentially not jumping on the bandwagon and his own "prudence" approach is maybe the best way forward?

The Bank of England's own survey of the secured credit market predicts a 42% fall in net balances available in the next three months..that's a 42% reduction in net money available to the mortgage market.

Yet the Blessed Leader continues to dither and believe the British economy is well placed.

How will the housing market hold up when the money on offer falls at this unprecedented rate?

Overpaid US bankers created a rediculous scheme to encourage Americans to buy property they couldn't afford.
Overpaid bankers around the world then bought chunks of highly dubious debt.
Whatever happened to due diligence?
If Joe Public used an overdraft to buy a car before checking that it had wheels and an engine, do you think that the bank manager would be sympathetic - or just smirk?
You could argue that some bankers some sold fraudulently & the buyers were just dumb.
But the fact is that UK, European and other banks willingly bought a pig in a poke.
Who regulates UK banks?
Hands up, Gordon...

There is a thin line between optimism and arrogance, in my view Gordon brown frequently crosses that line and the more he does the more out of touch with the people he appears.

Hi Nick, did the prime minister smile off camera? It's just I heard from someone who worked at No10 for a bit that his preferred expression is the scowl though it is swiftly removed if there is a camera in the vicinity. I don't think it reflects badly on him either way. He doesn't have the "showbiz" of Tony Blair but that is no bad thing.

I've been to property auctions several times over the years, and seen BTL investors with blank chequebooks, bragging to young couples trying to bid for a house to live in about their almost bottomless borrowing ability (although paradoxically they often can't afford to give their tenants a decent standard of service, and plead poverty when something needs to be fixed).

So, all in all, I can say hand on heart, I don't have much respect for Buy-to-Let and property investors generally. They have, to the last man, been making paper profits mainly by exploiting the least well off in society, and now the chickens are coming home to roost they can't offload their portfolios fast enough.

But often, they are in hock themselves - to the banks. Just like the first time buyers who've been sold the big lie - property won't ever come down in price, so if you don't get on the gravy train now, you'll be renting off a schyster for the rest of your life.

And when it all goes pear-shaped, does a bank expect to pay for its own mistakes? No. It expects the customers (over-stretched investors and first time buyers) to shoulder the burden.

A bit like Our Dear Leader.

If a landlord is in hock to the bank, then he's OK - he can either offload his overpriced portfolio to the next nearest wingnut, or simply weather it out by stiffing the tenant. The laws protecting tenants are a complete joke, I know enough professional landlords to recognise that for every half-hearted bit of legislation protecting a tenant, there are a dozen ways of working around it.

I am sick of the way banks take on NONE of the risk associated with ramping up property prices to absurd and unsustainable levels, but are content to reap all the rewards as long as the property pyramid system doesn't collapse.

As it happens, I think all these issues could be addressed very simply, AND the heat could be taken out of house price inflation avoiding a crash, with one very simple bit of legislation.

Here's my policy suggestion:

A bank should bear the consequences itself, if they take on a bad debt. They should NOT be allowed to sell the debt on, or recoup their losses from its other customers by raising charges or interest rates.

Any losses should come DIRECTLY out of their profit margin.

It's about time they managed their own financial affairs properly, instead of simply complaining that customers don't look after theirs after having spent the better part of a decade encouraging frivolous lending if not outright mortgage fraud.

Banks would not lose out massively through my proposal, if they've been lending responsibly. If they've been so irresponsible with their lending that the loan itself was doomed from the get-go and was only approved because some pillock OK'd a blatantly suspect mortgage in order to get his commission and the institution turned a blind eye, then they will be burnt more heavily - but that's life, and it's their own fault.

So here it is:

When a lender / borrower runs into difficulty:

1. If the property was purchased by a BTL landlord with sitting residents, then an independent agency calculates the rental income that can reasonably be achieved. The bank offers to convert the existing mortgage to an open-ended repayment mortgage for the outstanding sum, less deposit and interest which has already been paid to them.

If the landlord is unable to accept this offer, it is then offered to housing associations and Local Authorities on similar terms.

The landlord undertakes to charge their sitting tenants the market rate rent, of which 80% is paid directly to the bank every month, until the loan is fully repaid or the property is sold. The lender is obliged to charge the landlord no more than 2.5% above base rate in interest over the life of the loan.

2. If this option is not taken up, the property is offered for sale to the owner-occupier / sitting tenant, Housing Associations and local authorities, at a price calculated from what the customer owes, less and what he/she has already paid them in interest.

So, if the bank initially lent 拢120k on a 拢150k house, and the bank's already received 拢25k back in interest payments, and the borrower has paid off 拢5k of the actual loan, then the property is offered for 拢90k with the interest rate for the life of that loan capped to 2.5% above base rate.

The bank writes off the original mortgage completely, and issues a new mortgage to whichever entity is prepared to borrow 拢90k to buy it. Or it accepts a cash offer.

3. If neither option is taken up, then the bank must repossess. In which case, it sells the property on at auction, and writes off the shortfall.

I would make it illegal for them to recover their losses from the person whose property has been repossessed.

Furthermore, if there's a way to do it, I would stipulate that these properties would be offered to first time buyers and prospective owner-occupiers only, through a registration process.

Stripping away the noise:

鈥� The domestic economy is facing lower growth 鈥� lower household consumption, lower government spending, lower company investment. 1.75%-2.25% growth estimated for 2008 down from 3% last year. The true outcome is likely to be well south of this.

鈥� The price of money will have to fall to stave off a severe downturn. But banking liquidity is tight 鈥� the supply of funds is just not there.

鈥� True inflation, fuelled by massive increases in commodities鈥� prices, is higher than the economic growth rate. With not much in the way of excess capacity, lower interest rates will lead to still more upward pressure on prices. Official figures are already being well massaged given double-digit increases over the past year in many of the core household costs.

鈥� Public sector borrowing is estimated at an all time high of 拢43bn next year, just under 40% of GDP, right up against the government鈥檚 self-imposed target, yet the quality of public services remains abysmally low. Much of what has been spent since 1997 has been wasted and will continue to be so. Forecast tax revenues for 2008/9 are 拢6bn short from previously predicted government figures.

鈥� Household income is under unprecedented pressure. Household insolvency must increase.

In short, whichever economic measure you care to look at, contraction rather than expansion is the next obvious move. The Sunday Times recently called it a 鈥楻eturn to the 70s鈥�, with gold above $1,000 an ounce, oil at a record high, the prices of commodities soaring, the dollar through the floor and the word 鈥榬ecession鈥� on everyone鈥檚 lips.

Household income is being squeezed as hard as I can remember, between Labour's tax increases on the one hand and sharply rising costs on the other. Council tax is increasing, car fuel costs are increasing, household utilities prices are increasing and the cost of food is increasing. All at rates way above the government's rose tinted published inflation figures.

In the nine months since Gordon Brown became Prime Minister, butter has increased by 37%, eggs by 34%, bread by 28%, flour by 22%, milk and cheese by 17%, gas and fuel by 10% and petrol by 8%.Crude oil prices have increased by 80% since early 2007. Oil prices hit a new high of more than US$110 per barrel recently 鈥� a similar scale of price peaks was evident in 1973/74, 1979/80 and 1989/90, all of which were followed by global recessions and rising inflationary pressure.

Since January 2003, crude oil has increased by 250%, corn by 130%, copper by 460%, coffee by 146% and gold by 174%. Futures prices for oil, cereals and meat all suggest that prices through 2009 are certainly not going any lower. Only this week, rice prices surged to a 34-year high, an increase of almost 50% since January. The scale of these increases is without precedent.

In addition, many households鈥� fixed price mortgages are now coming to an end. Re-mortgaging is likely to mean both higher costs and an issue of availability. Liquidity is very tight. The number of mortgage products on offer has halved since last August with many products being withdrawn almost as quickly as they come on stream.

In October, the delayed increase in car fuel duty will give a further twist, just at the time when household income is under the greatest pressure with Christmas shopping imminent.

The basic rate of income tax may have just fallen from 22% to 20% but the benefit of this will be 90% offset by the elimination of the basic 10% tax rate. The Institute of Fiscal Studies has calculated that everyone who earns more than 拢40,355 will be marginally worse off from April 2009 because of the changes to tax and NI announced in the Budget. As all these costs bite into incomes, families will be faced with a number of tough contractionary options, such as to trade down in terms of housing; to cut discretionary spend; to look for better paid employment or; to find a second income.

Whatever choices households or businesses make, the result will be a contraction in economic activity, downward pressure on company profitability practically across the board, and so on business values. Share prices may well primarily be being hit by the effects of the credit crunch, but the impact of the Budget, the huge increase in household costs and the unprecedented squeeze in incomes should not be underestimated. It will get worse before it gets better. Discretionary household spend, and company spend, will both be under severe pressure through 2008 and 2009. Businesses and individuals will all have to save money, not spend it or invest it, through the rest of 2008. Gordon's tax yields look set to fall even before we allow for rising unemployment, which will surely follow.

So much for an end to boom and bust!

Why is it that every new statistic which shows evidence of the slow housing market is treated as bad news? Yes, there are not the ridiculous capital gains there used to be in domestic housing. The sooner people get used to the idea, the better. A house is not some kind of cash-generating magic box. If you want to make money, create a business and add value to the economy.

He won't leave it alone, will he..?
'Because we have low inflation, we can cut interest rates..'
Mr Brown, any decision on interest rates is down to the Bank of England, and is NOTHING TO DO WITH YOU...

Of course G.B has his head in the sand. He simply cannot be other than optimistic, to be otherwise would hand his opponants more ammunition than they already have. This is a continuance of the long-standing New Labour policy of self denial. They simply have been in power far too long!!

People who still cling to the belief that Brown is/will be a good PM seem to have forgotten how long he has been a part of the New Labour 'revolution' ... longest serving Chancellor etc etc. He has surely got to take much of the blame, along with his Treasury buddies, for the soon-to-be-dire straits we are in. As much as I detest the Tories, I do feel Labour inherited a fairly robust and progressive economy in '97 and have basically squandered it. We would have got rid of these jokers long ago if the economy had fallen more quickly, and the disgrace of PFI and waste of tax-payer's money was more widely noted. As the belts have to tighten, will we perhaps stop our foreign military adventures currently costing 拢billions a year (and stacking up huge future bills for rebuilding our shattered armed forces), sort out wide-scale social security fraud, make the tax system fair and proportional, invest sensibly in education and research for future prosperity, or will we privatise and PFI our few remaining assets and use the proceeds to build a giant sand pit (dome ...) so we can all get our heads in ...

What a load of old cobblers!

Brown knows he can't say what the real position is because it'll just cause panic and excerabate problems.

Really, he knows- as do you Nick and i'm amazed you haven't said so - that we're in a real mess.

Mind you, good news about the house prices coming down. Hopefully they'll crash all together and those profiteers who've taken advantage will learn a valuable lesson - namely that housing is a necessity not an investment opportunity!

The thing that frustrates me most is consistently hearing Brown quote grossly inaccurate statistics. My recollection of interest rates and inflation 15 years ago didn't match those our PM, and a quick trawl through the Offife of National Statistics' website quickly reveals the extent of Brown's lies. 15 years ago interest rates were not 15%; they were 6%, having fallen from a high of 15% in 1990. Brown's claims of 10% inflation are even more absurd. CPI inflation was around 2.5%, pretty much exactly where it is today (supposedly, though clearly for anything that matters i.e. petrol, food, council tax etc. it's more in the region of 10-15%). You have to look back to the end of 1990 to find anything close to 10% inflation, and naturally, because he's so disingenuous, Brown is quoting RPI inflation here, which briefly peaked at around 9.5% (CPI peak was around 8.5%). If he's quoting this figure, then on a like-for-like measure he should also be quoting the current RPI figure of around 4%, not the CPI's 2.5%. Furthermore, the figures show that it was only for a very brief period that inflation was anything like this level anyway - aside from about a year from early 1990, inflation remained below 7%. As for unemployment, it's impossible to say whether Brown's claims are accurate or not, due to the Labour government's grotesque distortion of the measure over the last decade (doubtless Brown would consider this a success in its own right), coupled with the wholly different labour market which limits the value of comparison anyway. Labour's dereliction of duty in relation to immigration, to the point where they admit to having no idea as to the number of migrants, plus the bit they can't do anything about anyway (EU), make comparisons with 15 years ago largely meaningless. When are members of the media, and in particular David Cameron at PMQ, going to start challenging Brown on his grossly misrepresented statistics?

The one question I would like to see asked whenever any politician spouts off about low inflation is:

What is the current rate of inflation when housing, energy and fuel costs are taken into account. Along with maybe council tax.

The inflation figures must include these basics which effect every houshold otherwise like most government statistics they are seen as spin not substance.

Dear "Landlord, Aberdeen" ...

Its because of people like you buying up lots of flats that people like me have to pay over-inflated prices for our only property in the first place!

If the government wants to do something, it should penalise further those who own more than one property imo.

thanks,
Tony

Many years ago I worked for a company that was on the edge of going bust. The CEO was always bullish and stamped down any negativity coming from a humble accountant. I once asked him why he maintained a stance of rubbishing the gloomy financial forecasts when it was clear we were on the edge. "I have to do that", he replied, "otherwise everyone else will get depressed".

Government policy is in disarray. They are promising to build record number of houses. How are the buyers going to find mortgages? I guess the housing shortage will continue already preparing the ground for the next boom after the crash that is yet to happen.

Read Tom Bower's biography of Gordon Brown. The outcome was all very predictable.

It's quite astonishing that whatever happens in the economy, it won't be the people who caused it (the banks with their bonus greedy high-earners and the politicians in their pockets) but the poor old British citizen already over-burdened financially.

What a great country!

Home to roost soon GB!

There is a thin line between optimism and arrogance, in my view Gordon Brown frequently crosses that line and the more he does the more out of touch with the people he appears.

That's all very well, but how was your holiday?

The trouble is Brown or indeed any politican in power facing recession would say that, however awful the actual circumstances.

Therefore as a guide to our actual situation his assurances are to be ignored

It's quite astonishing that whatever happens in the economy, it won't be the people who caused it that suffer(the banks with their bonus greedy high-earners and the politicians in their pockets) but the poor old British citizen already over-burdened financially.

I'm just remortgaging. I have controlled my spending and not been frivolus but to pay for city bonuses and private business profits, I'm going to have fork out more each month and deny my young family food.

What a great country!

Home to roost soon GB!

Do the people whining about how badly Gordon is doing really think that Georgie Porgie and Disco Dave will do any better? Really?

people have been complaining for ages that house prices were too high - now they are actually going down a bit and they are still complaining..

It's quite astonishing that whatever happens in the economy, it won't be the people who caused it that suffer(the banks with their bonus greedy high-earners and the politicians in their pockets) but the poor old British citizen already over-burdened financially.

What a great country!

Home to roost soon GB!

people have been complaining for ages that house prices are too high - now that they are actually going down a bit and people are still complaining..

The problem is that the banks and other lenders are still behaving irresponsibly, just in a different way. Before they were guilty of lending too much and now (having loaded people up with debt) they are increasing rates, withdrawing offers and reducing the amount people are allowed to borrow. They have obviously decided we are headed for recession and are acting to protect themselves for when things get worse, at the expense of the consumer and the economy in general.

Despite relatively low inflation and unemployment, the actions of these lenders (and the failure to regulate them effectively) means that a recession is now likely to be a self fulfilling prophecy.

This PM is more out of touch with reality than Thomas the Tank Engine (and at least Thomas was useful).
He and his recent predecessors have signed away so many of this countries rights to govern itself that there is nothing they can do but watch us all go down the tubes (heavens the Europeans won't let us stop the post office closures).
The inflation rate in this country is running at over 10% for the majority of people who have to buy food, water, fuel, council tax.
The salaries have been falling steadily for the last 10 years in our industry, part in response to the government spending tax payers money abroad - even the NHS computer system is a bonannza for BANGALORE with nothing left over for the IT industry here, not to mention the number of BMW's bought by the British police could have made Rover a VERY profitable company.

Labour / Conservative, nothing to choose between them, both bankrupt of ideas or morals, neither caring about this country, all just looking to their prime spot on the european gravy train.

Do you ever get fed up interviewing politicians, Nick? No straight answers to straight questions.

So McBean is denial again, this time its the economy...

I have increased the rent on my buy-to-let property twice in 12 months. The demand for rent is massive at the moment because no one wants to buy. Purchase prices coming down and rents going up....can't believe my luck.

Sounds like fantastic news to me. As a potential first-time buyer, I'm all for a housing market crash. Roll on affordable housing, once again!

Not suprised at his response from an unelected arrogant man. He has just taxed the people of this country into the ground and when ever there is a question about it he just blames the world. Give him a fiddle also the high taxes on fuel etc are ruining the economy. Why didnt nick mention nothern rock or was this just another political broadcast by the bbc.

From what I gather Gordon's plan for the economy is to borrow its way out of gloom. Currently running at over 拢1Billion per WEEK.

Not very sound economics Nick. Perhaps this should pointed out to dear Gordon & Alistair. It's the easy approach.

"Because we've got low inflation we can cut interest rates, because we have had low debt, we can afford to keep our public spending programme in line" - Gordon Brown.

The man is blundering fool. We do not by any meaningful standard have low inflation; excluding housing, fuel, travel, etc. is outright denial. And low debt? Excuse me but how many trillion is it now?! We still don't know how much long term PFI debt he's racked up over the last ten years. Just how big a mill stone will that be for us all for decades to come after he's long gone?

Did you really think politicians would penalise themselves in any way!

They have run this country down over the last 50 years and managed to turn the UK into a 3rd world country.

Well done past and current politicians for changing the countries name from Great to
Grot Britain!

I agree strongly with posts 52 and 56 and would add following:

(1) As Nick implies, Governments have far less impact on the economy than they like to claim. Extreme measures - e.g Thatcher's - can affect its shape. GB inherited a strong economy in 1997 at the start of a boom, but has wrongly claimed credit for the boom that followed. Also he spent during the years of boom and did not save; but it is likely the Tories/Liberals would have done no differently. UK is not better placed to weather the storm, but could have been much better placed.

(2) The boom of last 10 years has been fuelled by cheap credit, which is ending if not ended and it is a no brainer that that will mean prices of houses will fall, particularly as the position is exacerbated by upwards pressures on all forms of household expenditure, where inflation is way above official level. One reason for the disappearance of no deposit mortgages is that the banks now want a cushion of equity to protect themseslves against house price falls if they need to repossess. As others have said, in itself, house prices coming down is no bad thing at all.

(3) The silliest claim Brown made, which will come back to haunt him, was that the had ended the boom/bust era. As Greenspan says, there will always be boom/bust; it is built into human nature.

(4) What people do not know, as Nick says, is how bad this is going to get. It may be a correction, it may be something nastier.No one actually knows, but that in itself is a problem because people who do not have to will not risk money buying assets. There is huge uncertainty at the moment, unparalleled in recent memory. In the U.S., however, it clearly is already something much nastier.

Having just watched the interview with GB, I would like to live in his world - everything's great there! Clueless & that's a real real worry.

"An end to boom and bust"

I think Gordon Brown will regret he ever said that.

Saying that "Gordon Brown is refusing to look or sound gloomy" is another example of the prejudiced rhetoric that the 麻豆官网首页入口 indulges in these days. What ever happens to neutral objective reporting. This is nonsense. Has Gordon Brown been requested to look or sound gloomy by anyone - and has he refused to do so? Why would he be asked to do this?

Mr. Robinson, like many of his colleagues at the beeb these days, is eroding the standards of reporting.

Walker, Canada

At what point do these claims and comments become acknowledged as bare faced lies and at what point does a lie from ones prime minister become culpable?

We seem to be hearing a lot of stuff that simply does not stack up and have been for a long time. I know that politicians do this but these guys seem to be making it the norm. To quote GB " because we have had low debt, we can afford to keep our public spending programme in line". What is he on?

Nick, how can you sit there and accept a 'party political broadcast' as a supposed answer to a question? Why didn't you tell him that thousands (or millions if the clip will be on TV) will be watching his trite answers and just despise him even more than before?

As I don't own a house, I have found it fascinating to observe the last 10 years. I've not been blinded by personally feeling richer from house price growth. But pretty much every policy maker in government, senior people in banks and financial institutions, probably does own a house, and so has smugly refused to see that basic economic laws would come around to bring the downfall we are only just starting to experience.

As the owner of a small business I have been concerned for years that a good proportion of my income is from product sales being purchased by unaffordable credit being spent by my customers. In effect people have spent much of their futures already, and only several years of lower spending will bring personal finances, and discretional spending, back to sustainable levels.

"...the latest grim news on house prices"

The latest news in not grim. Quite the opposite. House prices are way, way too high, allowing no chance to the first time buyer to acquire a property.

Apart from property speculators, estate agents and mortgage brokers, very few would suffer, or even notice the difference, especially if they had no intention or need to move house. They will still be in the same house, with the same income, so what is grim about it. Of course, people who have foolishly borrowed on the mythical value of their house will possibly feel the pinch, but for society, that is a very small price to pay - and a valuable lesson may have been learned.

It is always interesting to hear 麻豆官网首页入口 comments. Rising house prices = good, falling prices = bad. Lower interest rates = good, higher rates = bad. Tell that to a retired person depending upon investment income!
Sunny weather = good, wet weather = bad. Global warming? Hose pipe bans?

Get real 麻豆官网首页入口!

Brown sounds like the captain on the Titanic - it's just a small iceberg and insignificant compared to that bigger one over there.
He either does not live in the real world, or is just blinkered by the bubble that he lives in. Inflation is running around 10%, house prices have fallen 2.5% according to these figures but some parts of the country will be much greater - Midlands is 5% according to the news at lunchtime.
I hope this rolls for a while, and we see that growth figures fall, and we actually do have a correction in the housing market because it has become ridiculous. Brown has ridden this, and taxed this, and wasted this boom for the last 10 years. Time for things to come home to roost.

BTW - if I were to meet the man I doubt I would be able to shake his hand. I'm sure many of us feel the same, just we are powerless to do anything

Dear Nick

I am one of the five million that will loose out financially now the 10p tax level has been abolished.

To say I am fed-up is an under statement.

Written to my MP but my MP about as good as a chocolate teapot!

Wrote back with a lot facts and figures - I lost the will to live

Bye from a Poor Grumpy Worker

Huge mistakes have been made in managing the UK economy because ministers and others don't understand the housing market. If planning permission for new houses was readily available, then house prices would broadly follow the cost of building. When the availability of houses is artificially restricted, then the value of houses become inflated when demand exceeds supply. When the rate of house price inflation exceeds the actual and likely future cost of funds, houses become a speculator's dream. All sorts of people speculate in the price of houses in many ways. People bring forward a purchase in times of inflation, they buy houses and flats for rental. They buy a bigger house than they want or need for the tax free gain. They buy second and third homes. All this means is that when house prices start to increase the system is unstable and the rate of increase climbs until the bubble is so big, speculators fear to invest more. This quickly stops house price inflation and prices stay static for a number of years until the increase in average earnings start to make houses affordable once more, then the cycle starts again.

Stupid people see the upward slope of of this cycle as "inflation" and try to fight "inflation" by raising interest rates when in fact, it is a speculative bubble. Each time they fight "inflation" in this way, exporters, particularly capital intensive exporters with long product cycles have their feet held to the fire. High interest rates make the pound more expensive crucifying profits in export markets, allowing imports to gain market share and of course interest charges on all their expensive capital equipment go up too. The overseas competitors can see this stupidity and if a UK competitor becomes weak enough they can and will destroy it.

The Treasury and the BOE make these gifts to overseas competitors through shear ignorance and panic. The pound is overvalued by the effects of North Sea oil, before all this starts, interest rates are already high to fund the trade deficit so bumping up interest rates even further to fight "inflation" adds to the misery of exporters.

This is the reason we have lost most of our exporting industry and the reason that not a single western company or investor wanted to back Land Rover Jaguar.

This stupidity has hugely weakened the UK exporting sectors. Ignorance is an expensive luxury the UK can not afford.

The policy doesn't even work effectively because high interest rates help importers to gain market share, so when rates eventually fall as they must, then imports represent a greater part of the economy and as import prices rise, we just ratchet up inflation.

There is no free lunch. The way to reduce inflation is to increase supply and to reduce costs. The UK better learn this lesson while there is still something worth protecting. Jacking up interest rates is voodoo. It only works by damaging jobs. When people read of companies failing and widespread layoffs, then they moderate wage demands. The companies that provide these newspaper headlines are nearly always exporters in huge tough markets. Just the kind of company that should be protected and nurtured. The smaller and more agile UK companies need these large companies as customers and to maintain the size of the industrial base. If the base gets too small, then the UK becomes are poor place to export from. This may be why Rolls Royce are investing in Germany. Although some costs are higher, overall they must feel it is a better place to invest. Look out Mr Brown, you need to fix this problem while there is still some money left in the private exporting sector. Otherwise, you will confront the same problem that Mikhail Gorbachev faced: A completely uncompetitive economy, that collapsed.

What is so bad about house prices finally dropping after 10 years of continual rises? This is simply the 'correction' that everyone said would happen. There is no way whatsoever that house prices could continue upward - 拢190,000 for the 'average' home is outrageous!

The economy, the housing market, the war in Iraq, the war in Afganistan, the national heath service, gun crime, unemployment, immigration. Gordon say麓s, give me a flood any day of the week

Gordon Brown lost my vote when he abolished the 10% tax rate. I will never vote for anyone who penalises the poorest and give tax concessions to the rich. It's pointless anyway - it's the people with least money who need tax cuts. Our household income is above average, so a few extra pounds a week more (or less) in our pockets is no big deal to us, but it would be if we were on the minimum wage.
As for house prices, a gentle steady decline is the best thing that could happen.
China: not perfect, but it's done a lot of good for the majority of its people and is a hell of a lot better than many of the countries we don't criticise, eg Saudi Arabia.

You can ask the questions we would if we could. So why didn't you bring to his attention the plight of millions of single people like me, in a rather low paid job, falling victim to the abolition of the 10p tax rate!

To all the people who say Gordon Brown is unelected, can we clear this up once and for all? He is an ELECTED MP and the ELECTED leader of the governing party. This is all you need to be PM. In this country we don't vote our PMs in like a US-style presidential election. All we vote for is the local MP.

Major, Callaghan, Macmillan, Douglas-Home and Churchill all became PMs in the same way.

So to all the Tory snipers: if Brown is "unelected", then so was Churchill when he took over from Chamberlain in 1940. The great Tory war hero, unelected? Bet you wouldn't say that!

Brown is in total denial about the state of the economy, but then given that it is his total incompetence over the last 11 years that has led us to this catastrophic position that is no surprise.

I find it incredulous that the public could have been so gullible as to have believed that they could have it all and never have to worry about paying for it, but instead rely on an endless tap of credit.

The crash is inevitable. The argument that housing prices would only ever go up because of a shortage of supply will be shown to be fallacious - it has nothing to do with demand and everything to do with property being affordable.

Since incomes were artificially inflated by credit this inflated the market beyond all reason. Sadly, the gap between true incomes (i.e. sans credit) and property will now only be bridged by a crash.

Simple question Nick, who asked who re the interview with Gordon Brown.

I strongly suspect that his 'people' would have contacted you.

And why would that be?

Why surely it's nothing to do with a negative opinion poll about him and his party on the same day - is it?

Sorry Nick, if you were asked, and we now know slavishly responded,you (the 麻豆官网首页入口) was the victim of yet another piece of Government spin.

Why we wonder does the population become tired and apathetic towards politicians and the media - both of whome deserve one another

A response to comment number 3. I would have thought Gordon Brown would have better things to do than to respond to blogs.

This is now where Gordon's dithering over Northern Wreck is coming back to haunt him.

If he had taken the Lloyds TSB offer last summer, not only would it have saved the UK taxpayer 80 billion in contingent liabilities, but the increased confidence in the market would have made mortgages cheaper and more plentiful.

Gordon Brown has the reverse midas touch - anything he touches turns to dross - even the UK's gold reserves.

From the comments above Mr Brown will not be thinking that an election is a good idea any time soon.
It is clear that there is more common sense and judgement out in the country than in parliament.
But we have always known that the cleaners have a better idea of what is going on in a Company than the MD.

The financial ineptitude of this Labour Government is finally being exposed. Gordon Brown, the iron chancellor (!) was an utter myth. I don't doubt the mans intellect or guile when it came to identifying new stealth tactics for tax but lets face it the last 10 years of economic growth had little or nothing to do with Labour's policies. Northern Rock, the credit crunch, labour's inability to recognise that inflation as a solitary target for the B of E is inappropriate in the current market conidtions, just highlights the government for the dithering incompetents that they really are. Words alone are not going to sort this one out Darling!

Why would Brown be gloomy?

He sits there in his state provided property, or in his taxpayer funded clean private house, downing his taxpayer provided groceries.

And all the while dreaming up new taxes and nanny state policies.

Nothing for HIM to feel gloomy about - as for the rest of us it's a different story..

Nick,

Forgive me, but I didn't quite understand why you didn't seem to accept The Prime Minister's remark about the fall in house prices in the past month compared wit the extraordinary inflation of house prices over the past few years. Anybody with any sense should have known that it wasn't particularly clever to pay off credit card bills and the like by re-mortgaging your home - sometimes your only capital asset. Or buying a new car, or going on a big holiday. It is abundantly clear that this habit was encouraged by the Bush administration to pay for tax cuts and the Iraq war with the consequent sub-prime disaster. The FSA was set up to monitor the financial system and it was the FSA that failed in warning us of the impending sub-primes tsunami. No heads rolled at the FSA. So now this long overdue adjustment to the excesses of the recent past is happening and the lesson we should all be learning is how to balance our books as individuals and how to hold to account those in authority who have failed us. That will be the FSA, in my opinion. Your doom laden last comments were sensationalist in tone. Something increasingly common in the 24 news world, but not that helpful. The financial meltdown makes excellent headlines but will the TRUE impact be? Those of us more financially prudent won't be gloating, but we won't be holding up our hands in horror and we won't be placing any blame at the door of the Prime Minister whose record in these matters has been, dare I say, pretty damm good.

From across the Atlantic in Florida, and not being privy to all the economic ramifications of the 2.5% drop in house prices in the U.K., it seems to me that after the incredible upsurge in real estate prices there over the past many years Prime Minister Brown is justified in saying that the drop is not of itself a problem.
I thought your readers would be interested in my experience of buying a house in Great Barr, Birmingham, after we had spent four years after World War II in a fruitless search for our own place. We managed to get on a builder's list of home buyers, and in 1950 moved into a semi-detached house in Great Barr, Birmingham. The price - 1,038 pounds. For the purposes of this blog I looked up the current asking price for a similar house on the same road, and almost fell out of my computer chair when I saw that the asking price was 137,500 pounds!! I will leave it to the mathematicians to work out the percentage of increase since 1950, but it obviously is high enough to boggle the mind of this former Brummie.