So – what went wrong with the British housing market? I interviewed Kate Barker, the economist and Monetary Policy Committee member, yesterday as part of The Spectator’s ongoing inquiry into the causes of the recession. Many thanks for your questions. As she is an MPC member, her words can come out at regulated intervals – ie, we have to run it today or not at all. So here are the top half dozen points. A full transcript follows.
1. Inflation targeting is not enough. “It happens that in the early years of inflation targeting, it did produce a stable economy. But I think it’s now clear that it can’t, by itself, produce a stable economy … Do I think we should have perhaps looked a bit more at some of the money indicators?’ Yes, possibly that’s true.”
2. On Gordon Brown’s 2020 target for housebuilding. “The fact that the government announced this big target for a long way out, well, I can understand why they did it in a political sense, but of course that’s not very flexible to circumstances.
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