Thursday Commentary

The day's big news has been the Nationwide report showing a 2.5% fall in house prices during May. This will resonate throughout Middle Britain as, for most people, their property represents their most significant (and for many their only) financial asset.

IF we are looking at a sustained period of house price deflation, this will undoubtedly hamper consumer confidence and prolong any economic downturn.

Yet, as the BBC article suggests, the RICS point out that demand for rental properties remains strong. To be fair, the rented sector has protected many parts of London from the worst of the housing downturn do far but even the rental market isn't secure from a lack of confidence. Nonetheless, in any falling market, if you get it right, there are bargains to be had.

Tonight's big news is the YouGov poll in tomorrow's Daily Telegraph. The poll details are here. It makes pretty grim reading (again) for Gordon Brown with the Conservatives now twenty-four points ahead. The key for me is the 39% who think the Conservatives will do a good job running the economy. This is not, I suspect, based on any other evidence than the perception that no one could be doing things worse than Brown and Darling.

Governments all over the western world are in trouble as the new economic reality takes over. Oil moved back up toward $130 a barrel today and the era of cheap fuel, cheap raw materials and cheap credit is clearly over. If Governments don't understand or can't cope with what is happening, why is there an assumption Oppositions do ? The "inheritance" awaiting Cameron and Osborne in June 2010 is looking horrendous and the Tories' own spending commitments won't help but the main problem will be managing public expectations.

There are a lot of worried and nervous people out here. Many may think that as soon as Brown is gone all will be sweetness and light. This would be extremely foolish - I suspect the next Conservative Government will be as unable or unwilling to deal with the new economic circumstances as the incumbent Labour administration.

If I were David Cameron, I might wonder if the next election will be a poisoned chalice for the Conservative winner just as it turned out the last time the Tories won in 1992.