Labour's Borrowing Plan
Labour's proposal to borrow an additional £28 billion could result in a significant increase in mortgage rates, potentially adding almost £2,000 per year to homeowners' expenses, according to the Treasury. The Treasury predicts that for every additional one percent of GDP borrowed, interest rates are likely to rise. This announcement comes at a time when the British economy is showing signs of improvement, with inflation at its lowest level in two years.
Impact on Households
The Treasury's modelling suggests that under Labour's borrowing plans, the increase in mortgage rates could range between 0.5 and 1.25 percent. For a household with a £200,000 mortgage over 30 years, a 1.25 percent rise would mean an extra £1,920 per year. It is worth noting that interest rates are expected to decrease in the spring, further complicating the potential impact of Labour's borrowing.
Labour's Response
In response to the Treasury's claims, Labour criticized the Conservatives for their handling of borrowing, mortgages, and interest rates over the past 13 years. Labour argues that under Rishi Sunak's leadership, national debt reached its highest levels in six decades.
Government Borrowing
Recent data shows that government borrowing was higher than expected last month. However, it was lower compared to the same period last year due to reduced spending on energy support for households. Nonetheless, the government has borrowed at least £24 billion more this financial year compared to the previous year, according to the Office for National Statistics (ONS).
Post-Brexit Finance Deal and Tax Cuts
Last night, Chancellor Jeremy Hunt signed a post-Brexit finance deal with Switzerland, aiming to streamline financial services and banking operations between the two countries. Additionally, Hunt hinted at potential tax cuts in the spring, as the government received a record £77.6 billion in tax revenue last month. However, he emphasized that the priority is to reduce inflation.
Inflation Figures
Earlier this week, the Conservative Party celebrated a decrease in inflation from 4.6 percent to 3.9 percent, the lowest in two years.
Did you miss our previous article…
https://hellofaread.com/politics/left-wing-governments-in-scotland-and-wales-accused-of-financial-mismanagement-and-waste/
