If the case for a housing stimulus was already unanswerable, today’s confirmation of the depth of the recession makes the lack of one unfathomable.
It’s not just the 0.7 per cent fall in GDP in the second quarter or the 0.3 per cent falls in the two previous quarters or that this is the first double dip recession since the 1930s. It’s not even the fact that the construction industry’s 5.2 per cent fall in output between April and June and 4.9 per cent in the first quarter is one of the major reasons why it happened.
Read the rest of this post at Inside Edge, my blog for Inside Housing
As the Bank of England unleashes another £50 billion into the economy is it time at last to use quantitative easing in a way that will boost the economy and tackle the housing crisis at the same time?
In essence, the idea is that the government should set up a not-for-profit public interest company with a remit to fund house building. The Bank of England would use £50 billion of housing QE to buy bonds in the company to fund the construction of homes and associated infrastructure and the bonds would be repaid from the rental and eventual sale of the homes.
So we’re in a double-dip recession and construction is to blame.
You don’t have to be part of the construction lobby or a Keynesian or even Ed Balls to think that something is badly wrong here. The coalition’s strategy of cutting public spending to reduce the deficit to pacify the markets to keep interest rates low to produce a private sector-led recovery is not working and it is way past time for Plan B.