08/02/2023 Former Bank of England policymaker Danny Blanchflower
predicts falling house prices in the UK will force the UK’s central bank to cut interest
rates this year. This comes as the result of a sharp slowdown in the housing market, with
both monthly prices dropping and mortgage approvals decreasing. Blanchflower explains that
because interest rate changes take time to impact the economy, the BoE must act now in order
to prevent further economic slowdown. The question remains, will we continue to see a slump
in the UK’s housing market, and is the pressure to cut rates insurmountable? This all seems
to echo comments we made in our 2023 Watchlist as we assessed the outlook for the UK
economy. Neil Wilson, Chief Market Analyst at Finalto, says: 
“The real danger for the market is
a longer-term slow grind lower as real incomes fall. However, the Bank of England might have
some good news in store for homebuyers next year.
“An
acutely British problem faces the Bank – raise rates enough to tamp down on inflation and
you crash the property market. This year the pressure on the Bank of England to cut interest
rates will become unstoppable as the country enters a prolonged recession and the worst
cost-of-living crunch in memory.” Find out more by downloading our
2023 Watchlist
.