Go back to previous generations, and a change in Bank of England base rates was universally viewed as one of the main levers which could change the political weather. Back when the Chancellor set the interest rate, how often did we witness them suspiciously come down just before party conference or in the run-up to May elections, only to slip back upwards after?
But for a whole political generation, we have not experienced any movement in interest rates and the impact it can have in politics. The base rate has been stuck at 0.25% since August 2016, and indeed hasn’t moved in an upward direction since July 2007. Millions of mortgage holders have only ever known low and falling rates but all that is likely to change next week, as the Bank of England is set to raise interest rates at last. The increase will only be the smallest possible margin, 0.25%, but politically it brings interest rates back into the game with consequences that aren’t easy to predict.
Clearly, those with most to fear from an era of rising rates are the Government. Anyone with a tracker mortgage will see their monthly payment go up immediately, and other mortgage rates will follow swiftly after. Who will they blame for this? Well the Government get blamed for everything, whilst Remainers will doubtless seek to put Brexit in the firing line.
There is, however, a view amongst some in the Conservative Party that the potential benefits for savers might balance the losses for mortgage holders. Tory voters are much more likely to be older and have savings in the bank, and they stand to profit from a rise in rates. Albeit, going back to the past, it often seemed that mortgage rates were much quicker to increase than their savings equivalent.
Whichever way this plays, an era of rising interest rates will change the political game. The headaches for Theresa May only grow.