House prices fall as spending cuts see economy stall

The UK is beginning to feel the first effects of Osborne's budget and his plans for cuts in public spending and the expectations of widespread job cuts in the public sector.

Government austerity measures are already plunging the British economy into reverse according to figures published today which reveal sagging high street sales and renewed falls in house prices.

Expectations of widespread job cuts in the public sector have begun to discourage households from moving home or buying "big ticket" items such as furniture and carpets, with spending going on essential items and replacements only, said the British Retail Consortium. One of the worst-hit sectors is big-screen flat televisions, where sales have slowed markedly, but the BRC also noted year-on-year falls in items such as shoes. It said that high street sales are running 0.5% higher than last year on a like-for-like basis, with the small rise largely due to food price inflation. "Talk of public spending cuts is unsettling consumers and they are concentrating on essentials," said the BRC director general, Stephen Robertson.

The property market is also suffering a fresh downturn, said the Royal Institution of Chartered Surveyors in a report today, with valuers across the UK blaming the decline on anticipated public sector job losses. The RICS housing market survey found that house prices fell in July for the first time since July 2009, with a continued lack of mortgage finance also deterring first-time buyers.

Some surveyors and valuers told the RICS survey they had been staggered by the ferocity of the market downturn since the coalition government's emergency budget in June. One firm in Shropshire said: "The market is the worst it has ever been. The government's determination to balance the books has undermined confidence," while another in Lincoln said: "The large number of redundancies expected has had a negative impact on the market."

Markets need confidence in order to flourish. Osborne and the Tories, by promising with glee that they are going to slash budgets and fire public service workers, have devastated UK confidence.

Who is going to spend large amounts of money at a time like this? When the government are almost enjoying telling us how severe things are going to get?

They were warned that this might happen. They were told that we should spend our way out of this. But, because of their rigid ideology, they went ahead and did it anyway. They tightened our belts further.

Now there is no confidence and little money making it's way around the system as everyone holds on to what they have.

The housing market stagnates. High Street sales shrivel.

Osborne's budget, as predicted, has made things much, much worse.

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Tags: UK, Osborne, Con-Dem coalition, house prices