Housing Bubble Trouble?

A central theme of the blog is that we need a sustainable recovery, built on investment and exports, not another housing bubble and consumer spending.

Over the weekend, the housing bubble was front and centre, with Mark Carney, the Governor of the Bank of England noting that the UK housing market had ‘deep, deep’ problems and said it was ‘the biggest risk to financial stability, and therefore the durability of the expansion’.

The interview is worth watching, in part because Carney is good at explaining his concerns in fairly straightforward english.

But it also reinforces the message that the Bank of England does not want to use interest rates to pop the bubble.

What can the Bank do?

Well the Financial Policy Committee – which looks after financial stability at the Bank – is meeting on 17th June and will be key to understanding its options.