Inflation is also stuck stubbornly high at over 3%, with ominous suggestions that it could climb to over 4% next year thanks to the VAT hike and the rising cost of food and energy.
And the final piece of festive financial cheer this morning? According to the British Bankers Association, mortgage lending in November fell to a 20 month low: just 29,991 loans for house purchases were approved last month. So there doesn’t seem to be much life in the property market at present.
But what does all this mean? Is it really as gloomy as it sounds? Well, on interest rates, Fisher is merely admitting what we’ve all known for some time: that when interest rates are as low as they’ve ever been there is really only one way for them to go – up. It’s just a question of when. And if you are a saver rather than a borrower, it can’t come a moment too soon, since cash in the bank is deflating at getting on for 2% per annum at the moment.
However, if rates do start to rise next year it will have a potentially nasty impact on business. It'll be harder for firms to borrow money, for a start. But probably more serious, and more difficult to predict, will be the macroeconomic effects on spending. If rates were to rise to Fisher’s suggested 5% level, then UK households would be spending a greater proportion of their disposable income on servicing their debts than they have for 20 years. Which would leave them with a lot less cash ready to do patriotic service propping up the general economy.
Which brings us to house prices. That low mortgage-lending figure isn’t all that surprising either; November is hardly a traditional boom time in the property market after all. But coming, as it does, after several months of sober news from the property sector, it certainly seems to suggest that the whiff of a housing recovery (which seemed to be in the air over the summer) has been blown away by the coming of the winter chill.
Even estate agents, those eternal optimists for whom anything larger than a broom cupboard is ‘spacious’ and any neighbourhood without a drug dealer on every street corner is ‘desirable’ are predicting that prices will continue to fall next year. This may not matter that much in itself (unless the house in question itself is yours of course) but a nation of homeowners who feel they are getting poorer is yet another brake on spending.
There’s more trouble brewing for next year on the banking front too, in the shape of George Osborne’s much-vaunted Banking Commission. The chancellor set up the five-member counsel of wise men to ‘think the unthinkable’ about how to restructure the UK’s banking system - how to keep it entrepreneurial and effective whilst making it a lot less reliant on state bailouts when things go wrong. Trouble is, whatever the Commission recommends it’s very unlikely to be the status quo. And since no-one in the City likes to be told what to do by a politician, that will leave Osborne with a lot of even grumpier bankers to deal with…
If things carry on at this rate, we’ll have to start investing in primary wealth creation again, perish the thought. Still, it could be worse – at least we didn’t join the Euro...