"What we have done with the budget is to stabilise the economy and that, in my view, was the essential first step. As a result of that, the forecasts are for interest rates to go down, inflation to go down... mortgage rates were individual decisions for the banks, but the interest rates will be coming down." This reflects Starmer's belief that his government's budget has positively influenced economic stability and future interest rates.
"It's a big loosening, and that will come with faster growth, higher inflation and higher interest rates," said James Smith, emphasizing that the government’s increase in public spending will have broad economic implications including the potential for rising interest rates.
The chancellor, Rachel Reeves, used her budget to announce a 70bn increase in public spending, to fix crumbling public services and invest in infrastructure. This substantial investment is aimed at stimulating growth but also raises concerns about future inflation.
The shadow chancellor, Mel Stride, attacked Starmer for denying responsibility for mortgage rates, stating, "At the end of the day, his government's choices will lead to interest rates staying higher for longer, punishing thousands of hard-working families with mortgages." This illustrates the political tension surrounding fiscal policy decisions.
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