Funding the Future

Will we have a house price crash?

People keep asking me whether the UK is heading for a house price crash.
The honest answer is that nobody knows for certain. But what we can do is assess the risks, and right now those risks are much greater than many people seem willing to admit.
The UK housing market was already weakening before the latest economic shocks emerged. Mortgage rates remain far higher than they were for most of the last fifteen years. Affordability is stretched. Many buyers are struggling. Many sellers cannot achieve the prices they hoped for. Transactions are slowing, and confidence is weakening.
Against that backdrop, I examine three possible futures for the housing market.
The first is the best-case scenario. House prices stagnate, activity slows, and inflation gradually erodes property values in real terms. That would be uncomfortable, but manageable.
The second scenario is much more serious. A deeper recession, driven by rising energy costs, inflation, higher interest rates and falling household incomes, could trigger significant house price falls, widespread negative equity and a frozen property market. Many people would find themselves unable to move, while some could lose their homes altogether.
The third scenario is the one nobody wants to discuss. If we get a wider financial crisis, banks, pension funds and credit markets come under pressure, mortgage lending could contract sharply, and house prices could experience falls on a scale not seen for decades.
In this video, I explain what each of these scenarios could mean for homeowners, landlords, renters and anyone hoping to buy a property. I also discuss why liquidity matters more than paper wealth in a crisis, why financial resilience is now essential, and why some households may need to rethink their plans before economic conditions deteriorate further.
This is not a prediction. It is a risk assessment.
But if you have a mortgage, own a home, rent a property, or hope to buy one in the near future, these are risks that you cannot afford to ignore.

What motivates neoliberals?

Why does neoliberalism survive when so many of its promises have failed?
In this video, I suggest that the answer has nothing to do with economics. It is all about fear.
Politicians, economists, civil servants and financial market participants know that the economy is not working as they promised. Growth is weak. Public services are under pressure. Investment is inadequate. Living standards have stagnated for many people. Yet the same ideas continue to dominate political debate and economic policy.
Why?
That's because admitting that neoliberal economics is wrong would require these people to acknowledge that decades of policies, assumptions, and careers have been built on foundations that do not deliver what was promised. The personal and professional cost of that admission could be enormous for those who have spent their entire working lives defending these ideas.
I compare this problem with the resistance Galileo faced when he challenged accepted wisdom about the universe. The evidence that he was right was always there. What changed was how people understood it. Once the world accepted a new way of looking at the same facts, entirely new possibilities emerged.
I argue that something similar may be happening today. Modern monetary theory offers a different way of understanding government spending, taxation, debt and money creation. The facts do not change. What changes is how we interpret them and the possibilities we can then see.
So is neoliberalism surviving because it works?
Or is it surviving, when MMT so obviously provides a better explanation of what is happening in the world, because too many powerful people are afraid of what might happen if they admitted there is a better alternative?

Banks should pay more tax

Bankers are once again claiming that they are being treated unfairly. Santander boss Ana Botín has argued that higher taxes on banks make no economic sense and that banks should be treated like any other business.
In this video, I explain why that argument is wrong.
Banks are not ordinary businesses. No other sector enjoys the same combination of privileges, protections and public support. Banks can create money when they lend. They operate with the backing of the state. They benefit from deposit guarantees. They know that governments cannot allow them to fail without risking damage to the whole economy.
These are extraordinary privileges, and they generate extraordinary profits.
Then, I explain why banking profits are fundamentally different from the profits earned by productive businesses. I look at how banks create money, why taxpayers ultimately carry the risks when banking goes wrong, and why the public deserves a return for granting banks powers that no other industry enjoys.
After that, I challenge the claim that banks are major creators of investment and jobs. Most UK bank lending is now linked to property rather than productive investment.
At the same time, banks play a major role in driving house price inflation, increasing inequality and shaping the allocation of wealth across the economy.
The video also explores the role of banks in financial speculation, commodity markets and inflation, and I discuss how banks profited from the turmoil that followed Russia’s invasion of Ukraine, while households faced soaring energy bills and a cost-of-living crisis.
At the heart of this debate is a simple question. If banks enjoy exceptional privileges, create money with public permission, receive public guarantees and generate profits from those advantages, why should they not pay more tax than everyone else?
The real issue is not whether banks deserve special treatment. The real issue is whether society is receiving a fair return for the remarkable powers that it grants them.

UK universities are being killed

Britain’s universities are facing a growing crisis. About one in five of them is now considered at financial risk. Courses are being cut, staff are losing their jobs, and some university towns could face serious economic damage if institutions fail.
But this crisis is not an accident.
In this video, I argue that the problems facing universities are the predictable result of government policy. For well over a decade, education has been treated as a market. Students have been turned into consumers, universities have been turned into businesses, and educational purpose has been subordinated to financial targets.
The consequences reach far beyond university finances. I explain how critical thinking has been squeezed out of education, why testing now dominates learning, and why many students arrive at university without the communication and analytical skills they need.
I also explore how universities became dependent on expansion, overseas student recruitment, and increasingly fragile business models, leaving many institutions vulnerable when conditions changed, as they have with the introduction of new immigration policies.
Most importantly, I ask what education should actually be for. I suggest an alternative based on three principles: curiosity, communication and community.
If universities matter to our economy, our democracy and our communities, then the current crisis should concern us all.
What do you think? Is higher education failing because universities have changed, or because politicians changed the purpose of education itself? Leave your views in the comments below.

Why are interest rates so high?

UK interest rates are far too high, and the Bank of England is making a serious mistake by keeping them that way.
Mortgage holders are paying more, renters are facing rising housing costs, businesses are struggling to invest, and public services are under increasing pressure. Jobs are at risk.
The Bank insists that high interest rates are needed to control inflation, but does the evidence actually support that claim?
In this video, I look at almost a century of UK economic history and examine what happened to real interest rates during every major period of economic stress, from the Great Depression of the 1930s, through the Second World War and post-war reconstruction, to the crises of the 1970s and the financial crash of 2008.
The pattern is remarkably consistent. When the economy is under strain, governments have usually allowed negative real interest rates because they reduce pressure on households, support investment, make government finances easier to manage and help economic recovery.
Today, however, the Bank of England is doing the opposite. Despite ongoing economic weakness, a cost-of-living crisis, stagnant growth, unaffordable housing and rising business pressures, it has deliberately pushed real interest rates back into positive territory. The result is a transfer of income from borrowers to lenders and from ordinary households to those who already own substantial financial assets.
I explain why high interest rates cannot solve supply-driven inflation caused by energy costs, disrupted supply chains and geopolitical shocks.
I also discuss the role of Rachel Reeves and the government, why this policy choice matters, who gains from it, who loses, and why Britain may be heading towards a deeper recession than necessary if current policies continue.
If you have a mortgage, pay rent, run a business, work in a public service, or simply want to understand what is happening to the UK economy, this is a discussion that matters to you.
Please let me know what you think in the comments. Should the Bank of England cut interest rates now? And if so, by how much?

You are not crazy

Every day, people tell me the same thing: they feel as if they no longer understand the world around them.
Politics makes no sense. Governments seem incapable of solving obvious problems. The wealthy become richer while ordinary people struggle. Climate change is ignored. Public services deteriorate. And yet we are constantly told that everything is normal.
This video is for anyone who feels that something is deeply wrong.
After a chance encounter with a doctor in the street, I reflected on a message I hear time and again from viewers and readers: perhaps the problem is not that you are confused. Perhaps the problem is that much of modern politics and economics has become detached from reality.
In this video, I explain why so many people feel alienated from contemporary politics, why neoliberal ideas continue to dominate despite their failures, and why it is important that we reassure each other that we are not alone.
Most importantly, I argue that there is an alternative: a politics of care based on respect, equality and concern for future generations.
If you have ever felt isolated by what is happening around us, this video is for you.
 

What 50 years has taught me

Fifty years ago, in the long hot summer of 1976, I went to university to study economics. Since that time, I have spent half a century reading, writing, teaching, researching, campaigning, and thinking about that subject in some way or other.
To mark that anniversary, and the twentieth anniversary of the Funding the Future blog from which this YouTube channel grew, I have written a new free ebook examining fifty thinkers who have shaped my understanding of economics and society.
Some are familiar names, including John Maynard Keynes, Karl Marx, Adam Smith, Amartya Sen, Stephanie Kelton and Steve Keen.
Others may come as a surprise as the book also includes philosophers, scientists, campaigners and social critics whose ideas helped me understand how economies really work, why societies succeed or fail, and what creates human wellbeing.
In this video, I explain why I wrote the book, how my fascination with economics began through reading railway history as a teenager, and why I still believe ideas matter. The questions these thinkers raised about money, markets, power, justice, democracy and human flourishing remain as important today as ever.
The ebook is more than 200 pages long and is available free of charge. There is no obligation to donate. My aim is simply to share the ideas that have influenced me over the last fifty years and to encourage debate about the kind of economy and society we want to create.
You can download the ebook using the link below. If you do read it, I would be delighted to hear what you think.

Trump is raising your mortgage

Most British mortgage holders live with uncertainty. They always face the risk of higher repayment costs through no fault of their own. A change in interest rates, a financial crisis, a war started by Donald Trump, or turmoil in global markets can suddenly increase the cost of keeping a roof over their heads.
But it does not have to be this way.
In the United States, millions of homeowners have fixed-rate mortgages that last for the entire life of their loan. They know what they will be paying not just next year, but potentially for the next 20 or 30 years. And, if interest rates fall, they can usually refinance and benefit from lower rates, whilst if rates rise, they are protected. The world's risks are not dumped on households as they are in Britain.
In this video, I explain how the American mortgage system works and why it delivers a level of security that most British homeowners can only dream of. I look at the role of Fannie Mae and Freddie Mac, the government-backed institutions that help underpin much of the US mortgage market, and explain how their guarantees make long-term fixed-rate lending possible.
I also explore why mortgage rates in the UK are rising again and why global instability, including Donald Trump’s actions in the Middle East, is feeding directly into the costs that British households now face. Financial markets price risk, and when uncertainty rises, homeowners are often the people forced to pay the bill.
The consequences are not limited to individual families. When households have to spend hundreds of pounds more each month on mortgage payments, that money is no longer available to support local businesses and communities. Consumer spending falls, economic growth weakens, and the wider economy suffers.
That then means I ask a deeper question. Why has Britain chosen a mortgage system that places so much risk on ordinary households when alternative models clearly exist? Why is it that the UK housing finance system overwhelmingly serves the interests of banks and financial markets rather than those of homeowners?
This video examines what a different approach could look like, why it could provide greater economic stability and growth, and why politicians such as Rachel Reeves should be paying much more attention to mortgage reform than they currently do.
If you have a mortgage, are planning to buy a home, or simply want to understand why housing costs remain one of the biggest pressures facing millions of people across the UK, this video explains both the problem and a possible solution.
Please join the discussion in the comments. Should Britain introduce fixed-rate mortgages for life, or should the current system remain in place?

New towns, old scam?

Labour says it wants to build new towns. But if Rachel Reeves funds them through PFI-style private finance, those towns could be financially crippled from the start.
PFI was sold as a clever way to build public infrastructure without increasing government borrowing. In reality, it was a fiscal illusion. The state still paid, but paid far more than it needed to. Schools, hospitals and many other public assets were locked into contracts in which every repair, alteration and service had to go through private contractors at inflated prices.
That is bad enough when it applies to one hospital or one school. Applied to whole new towns, it could be disastrous.
New towns need roads, drainage, schools, health centres, public spaces and utilities. If those are all wrapped in private finance contracts, the people who live there will inherit the cost for generations.
This is not prudence. It is financial engineering, and it will have a very real human cost. 

There is no shortage of money

In this video, I challenge one of the most deeply embedded assumptions in modern economics: the idea that there is a shortage of money.
The reality is very different. The world is awash with cash. Investment funds, pension funds and wealthy savers are sitting on enormous piles of money that they cannot find productive uses for. Berkshire Hathaway alone is holding hundreds of billions of dollars in cash because it cannot identify investments that offer acceptable returns.
At the same time, societies face urgent and obvious needs. We need new housing, better public transport, upgraded energy systems, flood defences, schools, hospitals and environmental restoration. The resources to fund these investments exist, but the connection between savings and social need has broken down.
I explain why this is happening, why stock markets increasingly look detached from reality, why bond markets are sending warning signals, and why governments are choosing not to create the investment opportunities that both savers and society need.
Most importantly, I argue that the problem is not financial. Currency-issuing governments can always facilitate investment. The real obstacle is political. Fiscal rules and neoliberal assumptions are preventing money from being directed where it is most needed.
As a result, I also suggest practical reforms to ISAs and pension savings that could release more than £100 billion a year for socially useful investment and help rebuild the UK economy.
The money exists. The need exists. What is missing is the political will to connect the two.