UK
British Prime Minister Gordon Brown cut an unpopular tax on home purchases on Tuesday as part of a package to boost the country’s slumping housing market and lift his flagging political fortunes.
Brown’s government said properties worth less than 175,000 pounds ($316,000) would be exempt from the tax, known as stamp duty, for one year, up from a 125,000 pound threshold now. That will cost the budget an extra 600 million pounds over two years.
The step was accompanied by a one billion pound package to aid first-time home buyers and people struggling to keep up with mortgage payments as well as help property developers in shifting new homes.
Shares in homebuilders and other construction related businesses jumped on the news but analysts were skeptical over whether the move could pull the housing market out of its worst slump in more than a decade payday advance low fees.
“The stamp duty holiday may provide the domestic housing market with a marginal stimulus but we doubt it will gave a major effect in getting the housing market moving again,” said Philip Shaw, chief economist at Investec.
The package is a key part of Brown’s efforts to relaunch his premiership after a bruising few months and he is expected to unveil plans later this week or next to help households cope with the rising cost of fuel bills.
With consumer confidence crumbling in the face of the credit crunch and rocketing energy bills, Brown’s ruling Labour Party is some 20 points behind the opposition Conservatives.
On that showing, it would easily lose the next general election, which Brown must call by the middle of 2010.
Filed under: economics by Wolf