ALEX BRUMMER: Shard of light from Halifax as house prices rise 1.1%

Anyone expecting economic fireworks in the King’s Speech will be disappointed.

There was a renewal of the determination to reduce inflation and keep public finances in order. But no sign of easing the tax burden, one of the pillars of Toryism.

The down-to-earth approach to the budget means that the rise in bond yields from a year ago is a thing of the past. That won’t stop Labor accusing the Tories of crashing the economy.

The Covid-19 inquiry is focusing heavily on Downing Street’s dysfunction during the pandemic.

The reality is that the economic steps taken at the time – the furlough scheme, VAT and business rates cuts and abused pandemic loan schemes – have prevented long-term scars on the economy. Instead of unemployment rising, it is vacancies that have risen.

The UK economy is bigger than it was before Covid-19. Resilience is a strong feature of Britain’s economic performance.

When interest rates soared last year, the Bank of England predicted the longest recession in the country’s history.

That didn’t happen, which is why the Bank’s governing body, the Court, has called in former Federal Reserve Chairman Ben Bernanke to do his homework on the forecasts.

Britain and the world are going through difficult times amid fire and terrible loss of life in Israel and Gaza.

That is why the government’s intention to reopen permits for future offshore oil and gas exploration makes sense. Energy security is of paramount importance as Britain moves towards a net zero climate.

It is impossible to have complete confidence in the Bank of England’s predictions. One of the biggest concerns for forecasters is a collapse in the housing market as those with mortgages have stopped paying fixed interest rates.

Home loan approvals have been weak, but concerns about a housing crisis have been greatly exaggerated. The latest Halifax data shows house prices rose 1.1 per cent in October, after six consecutive falls.

This matches an optimistic number from Nationwide. Commentary from lenders suggests the turnaround is due to a lack of supply, with potential sellers left on the sidelines.

That increases the possibility of a positive feedback loop as potential sellers are drawn to the market.

Housebuilders have been extremely cautious and want to avoid a repeat of the 2008-2009 crisis. But despite a ‘very uncertain’ market for 2024, Persimmon is more optimistic than the competition, reporting improved sales since October.

Shedding some light on rates, the Bank’s chief economist Huw Pill agreed with markets that a 5.25 percent base rate cut by August 2024 appears possible.

This contributed to the decline in yields on two-year government bonds. Better deals should become available for the approximately 650,000 that will be resolved in the coming year.

An improved housing market will not solve Britain’s long-standing productivity problem.

But it will do wonders for consumer and business confidence and could mean that gloomy predictions of a flattening, or worse, economy are too pessimistic.

Light touch

Accounting reform will never be sexy. But for stakeholders affected by failures at Carillion, Patisserie Valerie, Greensill and most recently Wilko, it is crucial.

The absence of legislative reforms in the King’s Speech, including a new Audit, Reporting and Governance Authority, is no coincidence.

The Tories plan to increase the city’s competitiveness, as evidenced by the recent decision to end the cap on bankers’ bonuses.

Audit and governance regulator the Financial Reporting Council has been told to back out of the reforms. It wants to ensure that the UK approach differs from the ‘pushy approach taken in the US’.

Sub-octane accounting firms and corporate hooligans can thank their lucky stars.

Wrong note

The British music industry is making a huge contribution to creative Britain, generating £4 billion in exports by 2022, boosted by the growth of recorded music, publishing and the return of touring. New markets have opened in the Middle East, Africa and Latin America.

But competition from South Korea, Australia and Canada, among others, is eroding market share.

It doesn’t help that Britain no longer has a listed national champion producer or that Universal Music, which acquired part of EMI’s catalogue, has opted to list in Amsterdam.

In a global arena, domestic ownership matters.