wo of the youngest leaders in nearly
ave any consequence to your business?
month: Will a coalition government have any effect on your business?
Well now these are interesting times aren’t they. After all the backstabbing and constant bickering during the election campaign we’re now at the dawn of a new era in politics. What I think is interesting is to look at the fact that the
government has ended up containing policies from both the Conservatives and the Liberal Democrats. The most significant win that the Lib Dems managed to get was undoubtedly a possible change to our voting system and the introduction of proportional representation. For those of you unsure (as I was) about what this means, it
effectively allocates the number of seats to a party based on the percentage of votes that the party received. The argument for proportional representation is that it more accurately reflects the political inclinations of the population (well, those that can be bothered to vote). Is anyone else dismayed that in the closest election for many years voter turnout was still only a little above 65%? There was also an interesting regional slant with England largely voting for the Conservatives but Scotland and Wales (who seek to have their own powers and government) voting for Labour.
One of the arguments against proportional representation is that because the party itself chooses who’s on its ‘list’ an unpopular politician cannot be removed by his or her local electorate. However, in an open party list, which is widely used in Europe, voters vote for both political parties and candidates, generating a list of people to fill the seats.
So, what other impact will the Conservative Liberal coalition have upon our business? Well, the cuts proposed will almost certainly create more unemployment and will sadly push more people into arrears and potentially repossession. Regulation in the mortgage market may also undergo something of a face lift with the proposed removal of the current tripartite system resulting in power reverting to the Bank of England – although the FSA may still be around a while yet. Those in the mortgage market who are not fans of the FSA may not quite get the new broom that they were looking for. Let’s hope on the regulatory front the goalposts aren’t moved too far.
Richard Hurst,
director, The Charlbury Group
The Con-Lib-Dem pact will not last. Cracks in its veneer will
soon appear and their true blue and yellow colours will separate from their all too thin green silk screen. My belief is that the Lib Dems would have done any deal in return for proportional representation on a plate. Fortunately, the Tories did not quite give them that. I only hope the potential referendum on this will put the Lib Dems firmly back in their third place box in future elections, with few enough seats not to make a difference. Not withstanding my cynical views above, we now at least have a government. Both sides of the coalition genuinely want to deal with the deficit as a priority and this is good for the long term health of the economy. While I do not like the planned tax increases, employee national insurance and increased CGT particularly, I see no alternative but to stomach the pain for the longer term gain.
No one likes the banks at present and the coalition seems hell bent on bashing them with ‘banking reform’. Burdening the banks with an extra tax seems grossly unfair. While the government did spend billions of pounds bailing the banks out, I am certain that within a few years the government equity stakes will be sold for a huge profit to the tax payer. Surely this is enough to pay for the bail out? The present regulation of the banks is more than sufficient. With respect to the housing market, nothing much has changed since the election. HIPs are dead says the joint manifesto. I now see housing transactions gradually increasing over the next few months. This will be helped by lenders beginning to offer more 90% LTV deals.
The securitisation market seems to be on the mend (without
government help) and this is essential for normal lending to resume. I hope that 95% LTV mortgages will come back to help the first time buyers and that banks will again be able to make rational risk / revenue trade offs as they used to. I am reasonably optimistic about the housing market. I think house prices will broadly hold their level in real terms over the next two years. After that I am certain that both boom and bust will return to the housing market.
John Wriglesworth,
managing director, The Wriglesworth Consultancy
sense. Do you want to be a part of the next Bigger Issue? Email
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morTgage InTroducer JUNE 2010 15
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