U.K. Housing Is a Sick Canary in the Economic Coal Mine
British lenders are starting to pull back from the housing market. That bodes ill for the economic outlook.
Watch out for the mortgage rate.
Photographer: Hollie Adams/Bloomberg
In any league table of institutions with the keenest view of what’s happening in a local economy, banks should be ahead of the pack. So the fact British lenders are starting to exhibit a lack of faith in the U.K. housing market is a worrying barometer of how fragile the economic outlook is becoming.
Fault lines are widening. Figures published on Tuesday showed the pandemic has already wiped out almost 700,000 jobs. Some 2.7 million Britons are claiming jobless benefits, an increase of 121% since March. And escalating tension with the European Union over Brexit has increased the chances of the U.K. leaving the bloc without a trade deal, posing the danger of a chaotic change in the rules governing the relationship with Britain’s biggest export market for businesses already trying to cope with the repercussions of the pandemic.