The Cambridge Weekly – 12th September 2022

The end of eras

With great sadness, we pass from the second Elizabethan age. Our Queen was a constant during this period of intensely rapid change. Across the political spectrum, we can acknowledge her ceaseless responsibility to her people. She retained her dignity as monarch throughout her reign supported by her faith and her humanity that was obvious to all. Despite her failing health, her last official act last Tuesday was to invite Liz Truss to form a government, the 15th Prime Minister during her reign. The official pictures show the Queen undertaking the task with a warm smile and a welcoming handshake.

Coping with the energy crisis

The post-pandemic inflation boom has taken many turns over the past couple of years. It started with surprisingly diverse supply-chain problems, increasing prices for raw materials. Growth, fiscal overhang and Covid then caused labour markets to tighten dramatically – pushing central banks into the aggressive policies we have seen this year. Fading growth and business confidence (outside of the US, at least) have recently lessened concerns of a wage-price spiral, but the war in Ukraine has kept inflation pressures excruciatingly high. Now, the threat of price rises comes mostly from the cost of energy. This is caused by a severe cost-push around natural gas and electricity – and it is overwhelmingly focused on Europe.

House price strength fades

The current inflation spike has hit virtually all parts of the world economy, and property is no exception. According to a report from the Bank for International Settlements (BIS), global house prices jumped a whopping 11.2% from April 2021 to March 2022. This was the first double-digit jump in property prices since the global financial crisis of 2008, and the rise was broad-based, affecting both emerging and developed economies.