Save, borrow, whatever
So the fairly essential cuts in interest rates are hitting savers. As a net saver, I can only say this is a good thing.
There are approximately four sorts of people in the UK, financially speaking:
1) people with no assets or liabilities. “The poor”.
2) people with houses and mortgages. “Hard-working families”.
3) people with some savings, no house and no mortgage. “People who noticed there was a bloody great house price bubble”.
4) people with houses, savings, and no mortgages. “Jammy sods”.
Cutting the interest rate benefits people in group 2, at the expense of groups 3 and 4. But the house price crash has massively disbenefited people in group 2, to the benefit (either now or at some point in the next couple of years) of people in group 3. The fact that we’ll lose out on interest in the short run is more or less irrelevant, since by next year our cash will be worth about 1.5x what it was in 2007 in terms of “how much house can you get?”. So it’d be churlish for people in group 3 to worry too much about bailing out the poor buggers in group 2 – we’ll just buy their houses for next-to-nothing…
People in group 4 are unequivocally hit both by the house price crash and by the interest rate cut. But since their net worth is enormous by comparison with everyone else, even after both these adverse events, and since they’re the ones who benefited from 40 years of house price inflation and the enormous wealth transfer from the young to the old that this entailed, their plight is pretty much inconsequential.
And the poor? Well, they’re pretty much still poor, just as they were during the boom.