13th November 2015
Britain’s housing market is ‘broken’ and interest rates are not going to increase soon and robots will take 15 million jobs.
This is the grim assessment of the UK from the Bank of England’s ‘blue-sky thinker’ and chief economist Andrew Haldane.
Addressing a Trade Union Congress last night, Haldane warned about the housing shortage and the fact it was driving prices higher.
‘The housing market is broken. There is a chronic and accumulated imbalance between demand and supply, and it is that which is sending skywards – and has sent skyward – house prices,’ he said.
Although an interest rate rise my help to stymie house price rises he said a hike is ‘still some way from being made’ as inflation was going to stay below the 2% target in the coming years, wage growth has subsided and global demand is uncertain.
He added that an interest rate rise would increase borrowing and would ‘increase unnecessarily the chance of the economy falling below critical velocity’.
‘For those reasons, I have continued to vote to leave rates unchanged, with a neutral stance on the future direction of monetary policy,’ said Haldane. ‘Now more than ever policy needs to be poised to move off either foot depending on which way the data break.’
Haldane had more bad news as he predicted 15 million jobs could become automated – particularly those in administrative and production sectors – as technology advances.
He said advancements in the 18th and 19th centuries had created a ‘hollowing out’ of jobs that widened the income gap between high and low-skilled workers. However, the process of hollowing out that would happen now is at a faster pace as machines replace humans for cognitive as well as manual tasks.
‘In the words of Marc Andresen, in future there could be two types of worker –those who own the robots and those who work for them,’ he said. ‘If these visions were to be realised, however futuristic this sounds, the labour market patterns of the past three centuries would shift to warp speed.’
He said it could create ‘large scale un- or underemployment’ if people were not up-skilled.