In one corner we have first-time buyers. Weighing in at around 30 years of age, this demographic cannot afford a downpayment on a home, coupled with the inability to procure a mortgage. They are desperate to come onto the property ladder and they are desperately needed to stimulate the lower end of the housing market.
In the other corner, we have small businesses. Weighing in at 4.7 million, these firms are first on the block if the recession takes hold. Mostly comprising of 20 or less staff, small businesses need support in the form of loans, mortgages and investment if they are to stay alive as the West crumbles.
The Government has been playing economic chess in 2008 and it seems they have got into a check situation. On the one hand they need to be seen to be helping first-time buyers, a lot of whom are very much swing voters but on the other they also need to be seen to keep the British economy going, which is propped up by small businesses. Also, this demographic could be easily swayed come voting time.
We are a nation of shopkeepers but we are also a nation of homeowners. And both need help and neither are happy.
And the Government can help inasmuch as they now have a degree of leverage when it comes to the lenders – the bailout means the banks owe Brown big time.
But what favour will Gordon want to call in? Will he want to see the production of more first-time buyer mortgages or will he want to see more loans to small business?
For the banks, it¹s a no-brainer. Small business investment means collateral, potential and sales. It means savings, credit cards and commercial mortgages and it means money in the bank. First-time buyers mean risky loans, trickle of money and very little potential in the short to medium-term.
So if it comes to the crunch who is going to get the precious capital? Can a country in a recession afford to fund first-time buyers and small businesses? Will the mortgage market suffer at the hands of small business upkeep? Or will more small businesses perish while the housing market survives?
The fight for capital will begin in 2009. Who will come out victorious? Well that¹s for Gordon to decide.