Mark Wadsworth

This is a spare 'blog in case my main 'blog at markwadsworth.blogspot.com isn't working

EU talks sense – shock.

From the BBC:

The European Commission has set out individual recommendations for the economies of each of the EU’s 27 member states and the eurozone as a whole…

The report encouraged the UK government to make sure there was “no slippage from the ambitious spending reduction targets”. The UK was also was told to reform its housing market, planning system and mortgage market, as well as to tackle youth unemployment and skills shortages.

The report also called on the UK to increase the supply of childcare and improve the availability of financing to small and medium businesses. It warned that “the UK appears to be at high risk with regard to the long-term sustainability of public finances”. It pointed, in particular, to the cost of an ageing population to the public finances.

Dill and OnTheOtherHand over at HPC did a bit more digging and uncovered these gems:

(10) The UK experienced a house price boom in the decade before the crisis. Prices fell sharply after the crisis hit but have since recovered partially and remain at historically high levels. Transaction levels collapsed and have remained very low. The house price boom contributed to the large increases in household indebtedness and unsustainable growth in household consumption in the pre-crisis decade. The collapse in housing transactions drove corresponding falls in receipts on housing transaction taxes, contributing to the worsening of the UK fiscal position.

Weaknesses in the housing market also help explain the UK’s high expenditure on housing benefits and high share of the population in state-subsidised housing. The UK has announced initial reforms to its planning system and to mortgage regulation. Reflecting the importance of this challenge to all sectors of the UK economy, there is a case to build on these measures to develop a more comprehensive package of reforms including in the mortgage market and property taxation to address these issues. (link)

and…

A single annual property tax based on current values could avoid many of the problems of the current regime. The regressivity of Council tax and perverse incentives of SDLT could be eliminated. A higher tax burden on more expensive properties would discourage speculative investment and hoarding, reducing pressure on housing supply and helping to discourage bubbles.

Revenue from such an annually recurring value-based tax would be more stable than SDLT since prices are much less volatile than transaction volumes. A value-based tax could also help weaken the link between house price inflation and consumption since post-tax income would be supported by lower taxes during times of falling house prices and held back when house price inflation was high. (link)

I imagine that this would go down a storm with the Daily MailExpressGraph, if they could be bothered to actually read it: “EU plans tax raid on UK homes!” or something like that.

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