Macroeconomics: UK economy, IB Economics

And, as if by magic, the uncertainty regarding future interest rates cuts has fed through into mortgage markets, with some lenders raising their fixed-rate mortgages a few fractions of a per cent.

This, of course has implications for consumer spending: in the first place, it raises housing costs and probably reduces consumer spending in this way. Secondly, it's likely to deflate asset prices - such as the stock market - and the negative wealth effect of this is also likely to feed through into lower spending too.

Seemingly good news for mortgage borrowers with fixed rate mortgages starting to fall, to the extent that Halifax has cut its two year fixed rate interest rates by almost 1%, and HSBC is expected to follow suit. This should reduce some of the pressure on homeowners who are looking to remortgage their properties.