IT’S probably my stage in life that the most common conversation I’ve had during the last week has been over mortgage payments (I know, my younger self would hate me too). Whether it was down the pub or on the sidelines watching a football match, it didn’t take long for talk about interest rates and tax cuts to bubble up.
The conversations were all variations on a theme. Most homeowners I spoke to had a fixed rate deal of some kind: the main difference was when these were going to run out and how big the difference was going to be when they renewed. The most worried were those who had fixed deals on low rates now – less that 1% – but were running out next year, when the rate available would likely be 5% at best: an increase in payments of hundreds of pounds.
My own mortgage was on a variable deal – until last Monday, anyway, when as the pound was tanking, I scrambled to find the mortgage equivalent of the last helicopter out of Saigon. I managed to get that agreed hours before the mortgage companies started withdrawing all their products. Other friends I know were not so lucky.
Thirty years ago, I was getting ready to go to university when Black Wednesday happened – perhaps the previous incident when the economic credibility of the government of the moment was similarly shredded. On that occasion, interest rates jumped 5% in a day in a failed attempt to shore up the value of the pound. Then, as now, the Conservative government saw a sharp plunge in the opinion polls – according to election expert John Curtice, the current 7% swing from to Labour is near identical. John Major’s government never recovered.
Rewind another twenty-five years and it was Labour’s turn to make a Horlicks of things. It says something that as we’ve been worrying this week about the pound reaching parity with the dollar, back in 1967 Harold Wilson was pilloried for devaluing sterling to a mere $2.40. Yes, $2.40. Wilson’s rhetoric was little different to Liz Truss’: his actions were the only way to solve our economic problems and ‘break out of the straitjacket’ of boom and bust policies that was holding Britain back.
Although the economy was starting to pick up again by the time of the 1970 election, Wilson still lost: people never forgot him talking disingenuously about how ‘the pound in your pocket’ had not changed in value. History doesn’t repeat itself, Mark Twain once purportedly said, but it often rhymes. Today’s pound in your pocket might escape further devaluation on the currency markets, but the double-digit inflation predicted for next few months will have the same effect.
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