The fact that the UK has grown used to soaring house prices in the past decade won’t help voters swallow the news that guaranteed property returns are no longer there for the taking.
Couple this with the higher cost of finance and the squeeze on mortgage availability and it would be surprising if recent economic events do not influence voters’ political persuasions.
The fact that Prime Minister Gordon Brown’s bullish forecast for growth was shown to be exaggerated by the International Monetary Fund hammered another nail into his political coffin.
In the recent past, economic issues have been low on voters’ lists of concerns but the current turbulence has changed this. Brown’s personal ratings are at their lowest since he became PM and the Tories are scoring double-digit poll leads.
But at least Brown can breathe a sigh of relief that he is not pursuing his political career across the pond. For the time being, the PM’s actions concerning the financial crisis are not likely to threaten his position but in the US it’s a different story. With the US election approaching, the crisis strategies presented by candidates could hold the key to the White House. As the squeeze tightens, anger is mounting and the pressure is on to find a solution, not only for the economy but also for the individuals affected.
This pressure has intensified since the US Federal Reserve bailed out Bear Stearns. The thinking is that if the government can step in to save a bank it should do the same for its citizens.
Recently, senators from both parties were keen to do just that in the form of a housing assistance package. But the result was criticised for being little more than a bundle of modest initiatives. These featured tax credits for buyers of repossessed homes and an advice fund of $100m.
More ambitious proposals such as a plan to reinsure between one million and two million defaulting mortgages were omitted as they could not be pushed through quickly enough. Speed was the priority.
Back in the UK, with the threat of growing repossessions and arrears, it’s only a matter of time before a similar package is demanded. So far, Brown has been slow to address the crisis so he’d be well advised to get working on a voter pleasing initiative as a matter of urgency.