With increasing nervousness about the next move in interest rates by the Bank of England's Monetary Policy Committee, the Treasury yesterday announced the appointment of Ben Broadbent, a senior Goldman Sachs economist, as the latest external member of the nine-man MPC. He will replace Andrew Sentance, a so-called hawk, after the May meeting.
Although comparatively littleis known of his views, a recentarticle by Mr Broadbent for theFinancial Times predicted a tightening from the MPC sooner rather than later. Thus, he may well side with the two other members who voted for a rise of 0.25 percentage points last time, although Mr Broadbent may not be as cautious oninflation as Mr Sentance, whomost recently voted for a hike of 0.5 percentage points.
The announcement came as demand for housing is declared to be at "historically low levels", by the the Royal Institution for Chartered Surveyors, which adds that worries about interest rates are weighing on confidence.
The latest institute survey shows the surveyors expecting prices to rise over those seeing them fall shift to a net balance of minus 26 per cent in February. While weak by most past standards, it is an improvement on the minus 31 per cent rating recorded in January, let alone the minus 39 per cent in December and an 18-month low of minus 49 per cent in October. Still, only London shows any sign of improving real estate values over the next few months.
The institute says that a continuing shortage of mortgage finance and increasing nervousness among prospective borrowers is driving prices lower.
The capital is the only part of the country to record rising prices, with a positive net balance of 14 per cent. Scotland came next, (minus 21) recording the least negative net balance.
By contrast, Wales (minus 58) and Yorkshire and Humberside (minus 51) are the worst performers, while in Northern Ireland the price net balance fell from minus 28 to minus 46. These reflect the preponderance of public-sector employment in those areas, and the prospect of heavy job losses as the public-spending cuts bite.