UK House Values Have Fallen by 25%, Contributing to Labour Vote Meltdown

By: Nadeem_Walayat

Whilst the mandarins of the Labour government scratch their collective heads as to why the voters have lost total confidence in Gordon Browns government, one of the key reasons for the meltdown in the Labour vote in the Crewe and Nantwich by-election is the housing bear market.

Therefore the UK economy has so far been hit by UK house price deflation of as much as 25%, this goes a long way towards explaining the 18% swing to the conservatives from Labour in the Crewe and Nantwich by-election.

Key Reasons for the Loss of Voter Confidence in New Labour:

1. Month on Month Losses in Home Equity Values - The equity withdrawal ATM money machine is GONE ! The credit crisis ensures the banks are not only reluctant to lend any more but know full well that we have not even passed the mid-way point of the credit crisis. Therefore the banks are cutting risk left right and center and where possibly forcing repayment of debts despite the UK government having thrown over £100 billion of tax payer liability at the banks to kick start lending.

The UK housing market is on track to continue the downtrend in line with the Market Oracle forecast for a 15% nominal price drop from August 2007 to August 2009. Which translates to an inflation adjusted drop on the RPI measure of 25%. Therefore New Labour hoping for an early turn around here is just wishful thinking.

2. Surge in Food and Fuel inflation that has completly discredited the manipulated CPI inflation measure, that is not only weighted in favour of deflationary items such as clothing and luxuries but also excludes huge items of monthly costs such as council tax and mortgage interest payments and therefore is not reflective of the surge in the cost of every day necessities that is experiencing inflation in excess of 10%. The real overall rate of inflation for most people is estimated to be in the region of RPI + 1%, this 5.2%. Therefore pay deals linked to the CPI are causing rebellion amongst public sector workers as evidenced by the recent teachers strike.

3. Economic meltdown - The UK economy is fast decelerating as indicated by the recent economic data. In December 07 the governments overly optimistic growth forecast for 2008 of 2.5% is clearly shown as electioneering propaganda as the government attempted to lay the grounds for election during the summer of this year ahead of the real economic crunch expected to occur during 2009. The actual economic trend is in line with the Market Oracle forecast of Dec 07 for UK GDP growth for 2008 of between 1% and 1.3% which may not be a recession but by years end will definitely feel like a recession as the unemployment trend turns decisively higher.

4. TAXES and Incompetent Government - The fact of the matter is Gordon Browns government is incompetent, and in that respect is showing the whole public sector to be incompetent. For years voters have worried over the spending black holes such as the NHS that have sucked in hundreds of billions with little output. We have witnessed a tripling in the NHS budget with barely a 30% increase in output. We have witnessed greedy GP's pocketing money meant for improving patient healthcare by tripling their salaries, then smooth talking doctors doing the rounds on breakfast TV proclaiming that the reason why many of the deprived wards of the country have worse life expectancy than third world countries is due to lack of government funding. Lack of funding ? More like systematic lack of public sector competence where annual pay rises of 33% are accompanied by less hours worked as Labour incompetence has repeatedly awarded GP's.

The voters have had enough and are crying out for a leader to bring the countries economy and finances under firm competent control. If today's voters find Britain's condition as worrying, then by this time next year the people of Britain will be panicking in the face of continuing loss of wage purchasing power as the country enters stagflation.

Labour is heading for political meltdown at the next election and the only person to blame for this is Gordon Brown who set Labour's meltdown in motion when he bottled out of calling the October 2007 election.

The reason why Margaret Thatcher lasted 11 years and Tony Blair lasted 10 years as Prime Ministers is because they both had vision of where they were going and when they made a decision, for better or worse they stuck to it. Famously, Margaret Thatcher's speech at the party conference stated 'U-turn if you want to the Ladies not for turning', and she never did! Gordon Browns problem is that he has shown himself to be a ditherer, where virtually every major decision be it NO to nationalisation of Northern Rock, or the abolishen of the 10% tax band are followed by a near panic U-turns that give no confidence in his ability to manage the country and hence implies Britain will drift from ever deepening crisis to crisis.

Gordon's Tax U-Turn to buy votes ahead of the by election was a clear example of the ever increasing inflationary lengths that a government in panic will go to in an attempt at buying the next election. Therefore Britain is not just in for a hard 2 years but the consequences of rampant money supply growth and debt build up in the face of crude oil sparked stagflation will be with us for more than 5 years.

Time is running out for Gordon Brown's premiership, at the rate of disintegration being observed he may not even last the rest of this year before a leadership challenge ends his premiership a little over a year after he deposed Tony Blair from the top job. Backbench MP's are now in open revolt as hundreds face joining the growing unemployment queues at the next election, and with all the signs that the UK economy will suffer for the remainder of this year and the failure of his £2.7 billion voter bribe, there does not to seem to be any clear solution to New Labour's political woes.

More Articles on Why New Labour is Experiencing Voter Meltdown

By Nadeem Walayat

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Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 150 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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