Home Politics Brexiteers v Remainers- Who is right?

Brexiteers v Remainers- Who is right?

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Brexiteers v Remainers

 

image of Owning a house is a key aim of Britons
Owning a house is a key aim of Britons

 

The Remainers seem to believe the whole country will be poorer as a result of Britain leaving the EU.

Certainly, those whose jobs are EU funded, ranging from politicians and their aides to those receiving university bursaries are concerned about their futures, but what about the rest of us?

In 1918 nine out of ten Britons rented their homes. Today 70% of the population are owner-occupied and most aspire to be so.

To be successful as property owners we need a little inflation in our economic system.

If we borrow £100,000 to buy a £100,000 home; a loan of that size is an immense undertaking.

Yet, if ten years later the value of our house has risen to £1 million, then our loan looks tiny in comparison.

Selling the house and downsizing to a £900,000 one will instantly get us out of debt and make little difference to the size of our home.

As owner occupiers, we need inflation to get us out of debt. If when we first borrowed the £100,000 we were earning £25,000 the loan represented four years’ income.

However, if wages rise tenfold and the loan stays the same, then its significance is reduced to no more than a few months wages.

Italy and Spain both have the same percentage of owner-occupiers as the UK.

In the past, in times of economic difficulty, they would have devalued their currencies in order to create property inflation enabling them to reschedule their debts and move forward.

Alas, since the financial crash of 2008, the PIGS states of Portugal, Ireland, Greece, and Spain have been locked into ever-increasing EU debts and have found themselves trapped.

To have a large number of their youth looking for work abroad isn’t an EU success story, but rather an unmitigated disaster and hence the rise of the far right, populist parties.

The EU member states economies’ are all linked to their strongest member- Germany.

And here lies the problem. In Germany, less than 50% own their own homes. Most rent, and therefore their economy is set up to facilitate this.

Beating inflation is their number one target. In a renters’ only state, inflation is bad news, because if rents go up faster than wages it will cause real hardship.

The German economic model is geared to suppressing inflation at all costs because it suits renters.

Whereas countries with owner-occupiers in the majority, need a certain level of inflation to increase property values and denigrate past debt.

Luckily for Britons, we are leaving the EU and will be much better off as a result.

Spare a thought for the PIGS countries, trapped into Euro debt for decades, and ultimately forced to give up cherished home ownership and become tenants once more, so as to fall in step with their German overlords.

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