2015 should bring more economic growth to the UK. The banking system is now able to finance more of a recovery. Many individual consumers will get a boost as wages are now on average rising faster than prices. The new year will bring further falls in petrol and diesel prices. This will relieve family budgets directly, as vehicle fuel is a large cost, and help lower other prices as delivery costs to shops and to customers decline. The food retail sector remains intensely competitive, with lower prices resulting from that and from some falls in commodity prices.
Voters will naturally wish to see per capita growth, which should happen. They will more importantly wish to see their own living standards rising. The government will have to push on with its p0licy of cutting the rate of inward migration by a variety of means, and make early progress on benefit entitlement issues for recently arrived people. It will be popular if more and more of the new jobs the economy is generating are taken by people already settled here legally, cutting unemployment and related welfare costs. All this is possible.
The government will also need to do more to tackle the problem of housing. House prices are now very high in some parts of the country, particularly in the areas with the most new jobs available. Limiting new arrivals will help. There will need to be more actions to ensure a decent supply of new housing in locations where people wish to live and where there is employment opportunity. The best place to start is London, where the building rate is rising but more needs to be built within the urban area. Much of this can be done by redeveloping brownfields and previously developed sites, and by changing uses intelligently.
The mortgage market needs to be sufficiently responsive to give people a decent chance of climbing the property ladder. Of course it is right to avoid excessive lending with no deposits and very high multiples of income that make it difficult to repay. It is important not to lurch too far the other way and make it too difficult for buyers, especially first time buyers, to get started.