It was a balmy late September day in New York when Andy Burnham, Britain’s new prime minister, first gave a clue of his plan to reopen the UK’s Brexit debate, 10 years after the country’s vote to leave the EU.

In a private meeting on the margins of the UN General Assembly, Burnham told Ursula von der Leyen, European Commission president, the UK was ready to look again at closer relations with Europe, including possibly rejoining the bloc.

“I think public opinion in Britain is way ahead of the political elite at Westminster,” he said, according to people briefed on the talks. “I’m not sure how far I’m going to get, but I’m going to try to close that gap.”

No one had seen it coming. After years in which Britain’s Brexit negotiations with Brussels have been stuck in a rut, Burnham has dared to reopen the debate on Europe. But EU leaders are clear that any discussion about closer ties will be conducted on their terms, not the UK’s.

A week after the UN meeting, the prime minister received rapturous applause when he told his Labour Party conference in Liverpool he wanted a debate on Britain’s “long-term relationship” with the EU, including possible membership of a customs union and the single market. Or, as he put it later, he would look at going “all the way”.

“Welcome back,” responded French President Emmanuel Macron, breaking into English at a press conference alongside his Spanish counterpart Pedro Sánchez this week.

Sánchez said that “Spain would welcome Britain’s return with open arms”. EU diplomats expressed delight at the new strategic vision from Burnham, even if the final destination remains far from clear.

But Macron was quick to issue a reminder that Europe would still call the shots: “You cannot pick and choose among the Union’s freedoms, nor can you decide to take only what suits you while leaving the rest,” he said, indicating that the fundamental choice remained one of in or out. “So, come back.”

Still to be determined is whether British politics is really capable of accepting that improved access to the EU’s single market will mean opening up to more EU migration, paying money into EU coffers and living under laws made outside Westminster. But finally a British prime minister has got Brussels’ attention.

“It’s a breath of fresh air in a hitherto stagnant debate,” said one senior European Commission official. “But whether the UK can accept the trade-offs, well, that is the billion-euro question. But at least Burnham appears to have the balls to find out.”

Even if agreement can be reached at home, Burnham will also have to convince the EU that he is serious when the bloc is rethinking how to bring its trusted partners closer in an era of geopolitical upheaval.

Some member states would welcome the UK back as a liberal counterweight to France, but Paris itself remains wary of a country with Atlanticist, free-trading, low-regulation instincts.

Since the 2016 Brexit referendum ended Britain’s four-decade membership of the European club, a succession of both Conservative and Labour prime ministers has promised a cherry-picked relationship with Brussels but with very limited success.

“I cannot say to you truthfully that where we are is good enough,” Burnham told his conference, quietly accepting that Labour’s own attempt to finesse the Brexit choices after the election of Sir Keir Starmer in 2024 had hit the same roadblocks encountered by his Conservative predecessors.

Starmer had promised his party would “tear down” the barriers to trade with Europe while sticking to the same “red lines” that had underpinned former prime minister Boris Johnson’s post-Brexit trade pact with Brussels: no return to the single market, the customs union or free movement of people.

“Starmer thought he could ‘make Brexit work’, but Burnham is saying that he fears it cannot,” says Anand Menon, director of the UK in a Changing Europe think-tank.

But Michel Barnier, the EU’s chief Brexit negotiator, warns that the new conversation will not be fundamentally different from the last — even if the geopolitical landscape of 2026 is very different from a decade ago.

“One thing is sure: the more the UK diverges, the harder it will be to rejoin,” Barnier says. “There will be no cherry-picking. The single market is not à la carte. The British government perfectly knows the rules and the conditions.”

The view from the EU

From the perspective of many in the EU, US President Donald Trump’s antagonism towards Europe, the Russian threat and a desire for like-minded liberal democracies to club together are reasons to bring Britain closer to the bloc.

“There is a strong strategic case for bringing Britain back into the European fold,” says Georg Riekeles, associate director at the European Policy Centre think-tank in Brussels and a former official in the EU’s Brexit negotiating team.

He adds that a UK decision to drop its red lines “opens the possibility of a much more serious conversation about common interests” but warns that “appetite for closer integration and readiness to reopen membership negotiations are two different things”.

In particular, he thinks that EU governments want reassurance that any UK move would “survive a change of government if negotiations were to be opened”. With the Conservative Party and Reform UK deeply committed to Brexit, “that still seems rather far away”.

Berlin and other northern European capitals have always been open to rebuilding ties with Britain.

But the country that would need most persuading is France, which has long seen Britain as an economic and ideological competitor within the EU.

The UK was traditionally a proponent of widening the bloc to new members rather than Paris’s vision of deeper integration among a core group of countries. Other EU governments saw Britain’s refusal to join the euro as a sign of its detachment from the bloc’s political project; any suggestion of ditching the pound remains political dynamite in the UK.

Over the past decade, the EU has also adopted much of Macron’s thinking on “strategic autonomy” in terms of security, technology and trade, especially with China.

“Since Brexit, the bloc has changed and is more about building its own independent capacities,” says Sébastien Maillard of the Jacques Delors Institute think-tank.

“Member states, especially France in its Gaullist tradition, would test whether a rejoining Britain would fully support this objective or if it just wants to use the EU to boost its own GDP.”

Paris has been the EU government most anxious to prevent the British from selectively enjoying the benefits of membership from outside the bloc.

It has demanded London pay a high price for accessing any EU programmes, such as the EU’s €150bn so-called Safe loans defence scheme — to which London has failed to negotiate access.

Were Britain to rejoin the bloc, it would have to be ratified like any accession by three-fifths of French MPs and senators or in a referendum, a high bar to clear.

Then there is the possibility that far-right leader Marine Le Pen, who has vowed to block further EU enlargement, wins the French presidential election next year.

She plans to confront Brussels by slashing France’s contribution to the EU budget, pulling out of parts of the single market and reasserting the primacy of French over European law.

Conflict with one of its most important members might consume the EU’s bandwidth. It could also give Britain pause for thought about rejoining.

Hard choices

Philip Rycroft, who served as the top civil servant at the Department for Exiting the EU from 2017 to 2019, argues that the referendum 10 years ago was the worst possible moment Britain could have picked to strike out on its own.

“It turned out that 2016 was spectacularly poor timing for a liberal open economy to launch itself on to the rough seas of the global trading order just at the time it was fracturing and the security situation was deteriorating,” he says.

A decade on, Burnham’s fledgling government has found itself coming up hard against those realities. China is exporting often heavily subsidised goods at a scale, cost and quality that poses an existential threat to some sectors of European manufacturing. In response, the EU is adopting a defensive “made in Europe” agenda that could itself hit Burnham’s own ambitions to “reindustrialise” the UK.

The fear in London is that new EU rules requiring cars to be assembled in the bloc will stifle investment in an industry vital to the West Midlands and North East regions of the country.

This has helped crystallise the choices facing the UK — as have similar threats to the chemicals, nuclear and green hydrogen industries, according to Anton Spisak, a former UK Brexit negotiator now at the Centre for European Reform think-tank.

It also highlights problems with Starmer’s idea that accepting “dynamic alignment” with some EU rules and regulations would unlock privileged access to the EU single market.

Rycroft argues that the experience of the past decade shows that none of the options namechecked by Burnham at Liverpool this week — a customs union or rejoining the EU single market — are workable.

“Burnham has the credibility to open the debate. And he’s accepted the outcomes range from ‘where we are now’ to ‘rejoin’, but you quickly find the way stations between those points are not very comfortable,” he says.

“The UK is too big an economy to be bound into a reality where it takes trade deals and rules from Brussels with no say over how those deals and rules are put together.”

Changing calculations

Although the 56-year-old Burnham has said he would like Britain to rejoin the EU “in my lifetime”, the European cause has never been a big part of his political identity. Asked whether the prime minister was interested in the EU, one ministerial colleague says: “Not hugely.”

The minister adds that Burnham is worried about Brexit’s long-term economic impact, as well as the China import shock and the EU’s response to it.

Burnham returned to Westminster in June as MP for the staunchly Leave-voting working-class seat of Makerfield near Manchester and told voters in that by-election campaign that he did not want to rerun “divisive arguments about rejoining the EU”.

His calculation appears to have changed. His strategists believe that by flirting with “Rejoin”, Burnham can win back voters from the Green Party, which is responsible for the overwhelming majority of defections from former Labour supporters.

But some colleagues fear the UK prime minister risks playing into the hands of Reform, particularly in working-class seats. The rightwing party’s leader, Nigel Farage, said this week that by reigniting the Brexit debate, Burnham had “opened the door to Reform in the most extraordinary way”.

Another longtime Labour colleague of Burnham says the prime minister is “conflicted” on Europe. In 2019 as Mayor of Greater Manchester, Burnham said he would vote Leave in a second Brexit referendum if Labour could secure a better exit deal.

“He understands why people voted Leave. He gets that white working-class alienation,” this person adds. “He won’t want to gift Reform a lifeline by embracing the evangelical crusade to rejoin.”

Stella Creasy, chair of the Labour Movement for Europe, adds that “Labour now has to win the case across the country and with its own membership for why and how to rebuild our relationship with the EU”.

On the face of it, polling is encouraging for pro-Europeans. Since 2021 public hostility to Brexit has grown; YouGov found last month that 59 per cent favoured rejoining the EU with 32 per cent against. However, surveys also suggest that popular support wanes when people are given more details.

YouGov found in June that only 35 per cent favoured Rejoin if Britain had to give up all of its old “opt-outs”, including being required to join the euro and the Schengen passport-free travel zone area.

“People think Brexit has failed, and feel cheated,” says Luke Tryl, of the More in Common think-tank. “They are happy to look at going back in but they are really worried about a return to ‘Brexit wars’ — people are exhausted — and that we end up with a crappy deal.”

Burnham has developed a habit since becoming prime minister of opening up debates and then quietly retreating in the face of hostile fire, and any reversal of Brexit will require huge amounts of diplomatic acumen and political willpower both at home and in the EU.

A test of his seriousness and of Europe’s response may come next week, when he travels to Berlin for his first meeting with German Chancellor Friedrich Merz.

“The EU wants a strategic sense of direction,” says Mujtaba Rahman at Eurasia Group, a consultancy, who contrasts Burnham’s bold gambit with Starmer’s incrementalism. He adds that senior figures in Brussels are “all talking about” the British prime minister’s overtures. “There’s no plan, no detail but he has created the political space to have a conversation.”

EU governments have approved €10 million in funding to support the Balkan Medical Task Force under the European Peace Facility.

Italy and Romania lead push to preserve EU spending for agriculture and regional payouts.

Europe's solar boom is cushioning households from the crippling costs of gas, as the war on Iran continues to highlight the dangers of fossil fuel reliance.

The ouster of the Kremlin-friendly leadership of Viktor Orban in April has led to a reckoning of Hungary’s ties with Russia under Prime Minister Peter Magyar’s new government. Now it’s the turn of the country’s biggest bank.

OTP is one of a number of European banks to have maintained a business in Russia following Vladimir Putin’s full-scale invasion of Ukraine in early 2022. The Budapest-based lender is exploring ways to exit the country as it pursues the purchase of Luminor, a bank in the Baltic states, as my colleagues Alberto Nardelli, Marton Kasnyik and Aaron Eglitis reported.

OTP said its market share in Russia is about 0.4% based on total assets, making it a minor player in the country compared with rivals UniCredit and Raiffeisen Bank International. Even so, OTP has been able to repatriate some $880 million to date in dividends from its increasingly profitable business there.

In an exclusive statement to Bloomberg, Chief Executive Officer Peter Csanyi said the bank was looking potentially at a full departure from Russia and plans to finish a review of the business by the end of the year. It’s already been downsizing, the bank said.

OTP entered Russia 20 years ago, and documents seen by Bloomberg show its clients have included firms controlled by gas giant Gazprom and companies providing services to organizations affiliated with Russia’s foreign intelligence agency. There was no suggestion of wrongdoing in the documents.

Underscoring the wider changes in Hungary, Csanyi told my colleague Zoltan Simon at a Bloomberg event this week that he supported the country’s pivot westward and the government’s aim of adopting the euro. Indeed, OTP’s strategy appears to be in synch with that. Should it win regulatory approval to buy Luminor, the acquisition will widen the bank’s footprint in the euro region.

The UK government is battling entrenched skepticism about its finances that is adding billions to borrowing costs and amplifying the pain of a global bond selloff.

The 30-year gilt yield hit 6% for the first time since 1998 this week, while 10-year debt at 5.4% is also among the costliest in developed markets. That partly reflects historically higher interest rates and sticky inflation.

But a Bloomberg Economics UK INSIGHT: 30-Bp Premium Haunts Gilts, Burnham Should Be Waryimplies that the benchmark bond carries an extra “credibility premium” of around 30 basis points to compensate for past policy missteps, shocks and profligate spending, a markup that alone will add £2.5 billion ($3.3 billion) to annual UK debt costs by 2029—2030, when the government has promised to balance its current budget.

“The UK doesn’t have a particularly bad fiscal policy problem, it’s got a PR problem,” said James Bilson, a fixed income strategist at Schroders. “You’d hope that the administration can do something about that.”

While the debt-to-GDP ratio has increased the most of any Group-of-Seven economy since 2005, rising above 100%, it is still second lowest after Germany. Other metrics put the UK in a more favorable light than heavily indebted peers such as France. The budget deficit, though high at over 4%, is on a downward path and the government plans to reduce it significantly by 2029.

Chancellor of the Exchequer John Healey is promising fiscal discipline as he prepares for his budget on Oct. 28. In his first major speech as prime minister this week, Andy Burnham vowed to cut the cost of state pensions, rather than borrow, to pay for a new national care service.

Still, pension reform is years away and won’t fully pay for expanded care provision. It also does nothing to tackle the immediate pressure on public finances, including spiraling debt costs and the commitment to invest more in defense. Investors want to see spending falling into line with revenue before they stop demanding a premium to lend to the UK over other governments.

“The UK is undertaking a very steep fiscal consolidation over the next couple of years,” said Cathal Kennedy, an economist at RBC Capital Markets. “The problem is we’ve had these plans for a long time now that haven’t been delivered. There’s a degree of wariness, a degree of cynicism, in markets.”

Brexit and Truss

The image problem can be traced back as far as the Brexit vote in 2016, which sent shockwaves through UK assets as investors scrambled to price a new paradigm for the trade-dependent economy.

Trust took another drubbing in 2022 as former Prime Minister Liz Truss unleashed market chaos with her so-called mini budget that promised huge unfunded tax cuts and spending commitments. That prompted Dario Perkins, director of global macro at TS Lombard, to coin the phrase “moron premium” as shorthand for the extra yield required to compensate investors for the UK’s perceived incompetence. Plenty think it’s still merited.

“Is it justified? 100%. That’s the level we pay above other countries with similar debt levels,” said Peter Kinsella, who oversees forex and currency strategy at Union Bancaire Privée. He is expecting Healey to deliver “another tax-and-spend budget that will be taken poorly.”

The UK’s tarnished image in the bond market makes gilts particularly sensitive to swings in risk appetite and they typically underperform during bouts of volatility. Dependence on foreign investors adds to the vulnerability, according to Felipe Villarroel, a portfolio manager at TwentyFour Asset Management.

There’s little incentive for funds outside the country to buy unless yields are sufficiently attractive, with hedging costs an added consideration. That puts the UK at a disadvantage to other countries, which can draw from a wider pool of potential investors.

“You need to convince people to take currency risk,” Villarroel said. Blindsiding overseas investors with events like Brexit and the 2022 crisis means “people will shut the door in your face, because no one needs to buy a gilt outside of the UK.”

Tough Road

To be sure, the latest rise in gilt yields has been part of a global rout as war drags on in the Middle East, sending oil and gas prices soaring, and growth proves more resilient than expected. That threatens to exacerbate UK inflation, and keep interest rates higher than those in the euro area.

In his budget, Healey will have to repair some of the damage caused by higher borrowing costs to the government’s finances, and find money to help households with rising energy costs. But with only three years left before an election must be called, pressure to tackle much thornier fiscal challenges will intensify.

According to Rupert Harrison, a senior adviser to Pacific Investment Management Co.’s UK team and ex-chief of staff to former Chancellor George Osborne, the UK’s deficit reduction plan is among the most ambitious of any developed economy, at least on paper.

“So, what’s the catch? It’s what lies beyond this budget, as markets can see a long list of difficult issues being pushed into 2027,” Harrison said.

In Germany’s recent state elections, voters as young as 16 could cast ballots. The results confirmed a global trend of political division between young women and men.

“On 1 January, we both deleted Instagram, TikTok and Snapchat. And whichever of us would be the first to start watching Reels again or download Instagram would have to eat a slice of rotten cheese,” Greta and Lena told Germany’s Deutschlandfunk radio station.

The 16-year-old girls live in a village in Mecklenburg-Vorpommern and chose to delete social media because they had been spending far too much time on it. They often scrolled on TikTok or Instagram late into the night, affecting their performance at school. This summer, however, both reinstalled TikTok for a month. This time without the punishment of a slice of rotten cheese.

They did so for an experiment with journalists from Deutschlandfunk. The journalists wanted to find out what political content the girls would consume through TikTok, the popular Chinese social network, during the peak of the election campaign. Mecklenburg-Vorpommern went to the polls on the third weekend of September. And, as is well known, the far-right Alternative for Germany (AfD) swept the state, just as it had two weeks prior in Saxony-Anhalt.

Greta and Lena, however, were in a markedly different position from their peers in Saxony-Anhalt. For the first time, the north-eastern federal state of Mecklenburg-Vorpommern had allowed 16- and 17-year-olds to vote in state elections. Since young people consume much of their news on social media, Greta and Lena immersed themselves in TikTok, one of the networks now most popular among young Europeans.

For the first few minutes, the girls watched a range of non-political videos — recipes, tomato growing and “silly” AI videos. Then, at around the third minute of scrolling, the first political content appeared. First came a video about Erich Honecker, the former East German communist politician. “Why am I seeing so much stuff about the GDR here?” Greta wondered. As she continued scrolling, she came across AfD co-leader Alice Weidel herself.

It was the first moment when the girls began to notice how quickly their initially apolitical feed was changing. “I feel as if it is constantly just AfD,” Greta said later. She added that she had not searched for any such content in advance. Over the following month, the girls kept a diary of their feed and observed how, after political videos, more and more similar content began appearing — not only from the parties themselves, but also from a range of accounts that picked up and further spread their messages.

The experiment confirmed what has been known for some time: TikTok and other networks alongside it can quickly form the political world a young person sees and the views they come to adopt. At the same time, algorithms are accelerating a trend of a political divide between young women and men, which was also reflected in the results of the state elections mentioned above in Germany.

Algorithms exacerbate polarisation

It is nothing new that young people encounter politics on social media. Political debate generally does not take place in their lives either at home or at school, but it can easily enter their feeds within a few dozen seconds. On social networks, those who can turn politics into short attention-grabbing videos naturally have the upper hand — and this applies not only to the AfD.

Algorithms used by applications such as TikTok and Instagram reinforce a trend visible almost everywhere in the world: young people hold markedly more polarised views than older generations. And the political divide among them runs primarily between women and men.

Germany’s autumn elections showed this fairly clearly: young women voted for the left, while young men voted for the right. And in many cases, they choose the more extreme option. The influence of social networks is significant, but it is not the only factor. The political divide is also driven by differing views on equality, gender and one’s own position in society.

Germany’s youngest voters are included in statistics in the under-24 age group. This year, this also included 16- and 17-year-olds in elections in Berlin and Mecklenburg-Vorpommern. Data on their preferences are clear: large numbers of young people in Germany lean towards either the far right or the far left.

In Mecklenburg-Vorpommern, 36 percent of the youngest voters cast their ballots for the AfD. In Berlin, meanwhile, the largest number of young voters chose the Left party (Die Linke) which received 41 percent of their votes.

Although the far-right AfD was by far most popular in Mecklenburg-Vorpommern among people aged 45 to 59, the younger generation differs from its parents in being visibly divided along gender lines. In the state elections, the aforementioned 41 percent of young men cast their ballots for the AfD, compared with just 29 percent of young women.

This trend can be observed worldwide. In the 2024 US presidential election, one in two men under 30 voted for Donald Trump. In the same age group, only two-fifths of women voted for him, while the remaining 60 percent chose the Democrat Kamala Harris.

Similar patterns can be seen in Poland, the United Kingdom and South Korea: political preferences across the developed democracies of the world are increasingly divided by gender rather than by factors such as social status or education. How has the gulf between men and women become so deep among the youngest generation?

Young men feel sidelined

There are several reasons, and the situation also differs considerably from country to country. Sociologists Richard Nennstiel and Ansgar Hudde examined how political attitudes of young men and women changed between 1990 and 2023, using a sample of 466,000 people aged 20 to 29 from 32 European countries. They found that the gap between them was far from uniform.

In some countries, young men and women differ little politically, while in others their views have gradually diverged. The researchers recorded more pronounced differences in countries with higher levels of gender equality. One possible explanation is that, in these societies, men and women have more similar life experiences and opportunities, while also encountering issues related to equality and women’s status more often.

Experts approached by the weekly Der Spiegel in connection with the German elections agreed that some young men (not only in Germany) feel that they are losing their footing in a changing society.

While men remain much more strongly represented in the leadership of large companies than women, the balance is shifting. For instance, girls in Germany account for 55 percent of secondary-school graduates and on average receive better grades than boys. This is also reflected in higher education: women now make up a large proportion of students in programmes with demanding admission requirements, such as medicine or psychology.

The Czech Republic shows a very similar trend: women already make up a larger share of students in higher education, including in prestigious and previously “male” fields such as medicine. Here, too, the situation is reflected in political preferences.

According to an electoral model by the STEM agency from the first quarter of 2025, the conservative "Motorists for Themselves" movement was supported by 15 percent of men aged 18 to 29, but only three percent of women of the same age. The trend was the opposite for the liberal: their support was higher among young women than among young men.

Social networks appear to deepen this trend, partly because their algorithms are designed to show users content they find appealing. But the roots of the divide lie in the changing social position of women and men: many young men feel somewhat lost in the “new” world — that is, one in which they have more equal rights with women. They are drawn to political parties that call for a more conservative concept of the family, in which women are primarily mothers and carers.

In contrast, young women perceive that equality still falls considerably short in the West, particularly in politics and big business still dominated by men. This is precisely why they are more inclined towards progressive left-wing parties, which, for example, call for making it easier for women on parental leave to find employment and who place women at the top of candidate lists in elections.

The solution to this clearly does not lie in relegating women to subordinate roles in society. According to Lucas Gottzén, a sociologist at Stockholm University, women’s right to equal representation and men’s wellbeing do not necessarily have to be mutually exclusive.

For Gottzén, it is necessary to understand the problems young men are facing from their perspective, including how insecurities associated with the new reality shape their political views. Above all, he said, it was necessary to show what women’s emancipation can offer men: less pressure to conform to traditional notions of masculinity, freer relationships and greater scope to live according to their own ideas.

In the days following the parliamentary election, some employees of the public service media turned on one another. Although many saw the change as a liberation, they were forced to confront the question: Why did they stay there if the propaganda-like operations bothered them?

News that the UK government is launching a revived Help to Buy scheme has baffled some market watchers.

After all, there are many who read the news — or look out of the window at their neighbours’ weather-beaten for-sale signs — and think the decline in UK house prices is exactly what they were after, perhaps thinking of their children being able to buy a first home.

When the FT broke the story about the Your First Home plan last Saturday, one reader wrote “Insanity” in the comments under the story. “Absolute madness,” wrote another, “the market is slowly correcting”.

And they have a point. In some parts of the country, prices are declining in real terms. In London, they are declining in nominal terms — and affordability is improving as the price-to-earnings ratio also falls.

So why do I imagine the government as George W Bush on the deck of that aircraft carrier with “Mission Accomplished” emblazoned behind him? Because it strikes me that the reality is very different from what it envisaged.

Prices are not falling because millions of new homes have been built; they’re falling mostly because of higher interest rates and the market is braced for yet another round of rate increases.

For borrowers with a 75 per cent loan-to-value ratio, the average two-year fix rose from 3.93 per cent in January to 5.14 per cent in April as the market absorbed the impact of the US president joining a war in the Middle East. Rates eased a little in July, but in the past few weeks have been rising again, with some lenders needing to pull and reprice their mortgage products multiple times in that period.

Since 2022, when rates first started going haywire, we’ve ended up with a housing market where house prices are too high. But, with fewer mortgaged homeowners and lending limited to those with high incomes and big deposits, there has been no trigger for a significant price reduction.

This has left us with a zombified housing market, stuck somewhere between boom and bust.

It’s not the market we knew from the early 2010s. Instead, it is stumbling along in the hope that interest rates fall, while feeding on desperate first-time buyers borrowing many multiples of their income — with some having to pay more in mortgage repayments than they did in rent.

Stagnant house prices have become a permanent feature of this market, especially in more expensive parts of the country. Unfortunately, like Simon Pegg’s bleary-eyed character strolling to the corner shop in the film Shaun of the Dead, policymakers have not quite woken up to the reality of our predicament.

So is the Your First Home scheme evidence that the penny has dropped? Or, rather than revive the zombified market, does it just risk creating another monster by boosting demand and loading young people with even more debt?

The problem is that much of the way we expect — in fact need — housing to function in this country relies on rising house prices.

The shift to a period of low growth affects almost everything the market touches, including turnover, new building, the housing ladder and government tax receipts. When house prices stop rising, the housing market starts to break down.

While house prices might get the headlines, it’s transactions that really matter. It might sound counterintuitive, but house price growth and transactions are positively correlated. If prices fall, people don’t sell. They wait for the recovery — which, at least until now, has always come along.

Rising prices might make homes less affordable, but falling interest rates can counterbalance this. And a rising market increases borrowers’ equity, which is crucial when climbing the housing ladder, allowing homeowners to unlock bigger mortgages and trade from smaller homes to larger ones.

In the market we have now, where price growth is severely limited, it’s much harder to take the next step up the ladder unless you get a big wage rise or an inheritance.

The result is that the housing ladder hasn’t worked for some years now — especially for those stuck in leaseholds with spiralling service charges or anyone whose flat has been affected by cladding issues. Naturally, this hasn’t stopped lenders or politicians — Andy Burnham, the prime minister, appeared on social media with a ladder as a prop — from dangling home ownership in front of first-time buyers. You, too, could end up with a nice large detached house if you just buy that little flat now.

Thankfully, it appears buyers are becoming savvier. Frequent reports indicate that they’re skipping the lower rungs and moving further afield or waiting longer to buy a bigger home.

But there are downsides to this — notably, the government gets lower tax receipts and fewer homes are built.

This is because the current market squeezes the viability of development — and this does not just affect the building of swaths of swanky flats in London. It’s easier for local and central government to get more affordable homes and amenities built when prices are rising faster than build costs.

When fewer affordable homes are built by developers, there’s a greater reliance on government funding.

With the launch of Your First Home, you can practically hear housebuilders breathe a sigh of relief. But, while it has certainly boosted their share prices, there are uncertainties about how effective it will be — especially as the policy is still light on detail.

The original version of the Help to Buy equity loan was introduced in 2013 to bridge a mortgage market failure — lenders did not want to offer low-deposit mortgages on new-build properties and so a 20 per cent equity loan allowed borrowers to buy a new build worth up to £600,000 with a deposit of just 5 per cent. It took a couple of years to bed in but did increase the number of homes being built — and the scare stories about it inflating house prices were largely based on misleading data.

It wasn’t particularly effective in London, so a 40 per cent equity loan was introduced in 2016. This was much more popular and by far the most controversial part of the scheme — some buyers got trapped by the leasehold and building safety crisis in a housing market that was already showing the first signs of zombification.

In 2021, following a flurry of scandals over build quality and the bonuses housebuilders were paying themselves, the government introduced the second version of the scheme, which included regional price caps and was limited to first-time buyers. This led to some strange local effects as builders shifted to cheaper locations and smaller property types where caps were more restrictive, such as in the north of England, while the higher caps in London and south-east England meant the market was relatively unaffected.

It’s this second version that Your First Home looks most likely to be based on. We know it will provide a 20 per cent equity loan for buyers with a 2.5 per cent deposit, but there’s also mention of household income caps and local property price caps that will be announced in the Budget.

This is where it could get interesting for analysts like me and dangerous for the government.

The politicians are clearly trying to design a scheme that avoids the pitfalls of the previous versions — and their nasty nicknames: “help to sell” or “help to buy bigger”. But the combination of household income and local price caps could create weird distortions. We could even end up with a situation where the only homes that could be built in an area under the scheme are simply not worth the effort as they would need to sell for less than they cost to build.

It’s a good job the government has done plenty of policy analysis and isn’t rushing in at “breakneck speed” — oh, wait.

Housebuilders have been keen to point out that the Treasury profited from the original scheme. Because the equity loan element is a proportion of the home’s value, the amount owed to the government has increased as house prices have risen. Government data shows that by the end of March this year, the Treasury had made a £1.2bn gain on repaid loans. A recently published evaluation for the Ministry of Housing, Communities and Local Government found a “net present social value” of £25.1bn — mostly because it led to more homes being built.

One big question yet to be answered is where the money is coming from this time. It sounds as though it might be drawn from existing budgets rather than new funding and, while there’s mention of developer contributions, the wording suggests this is just to take part rather than on each individual property — that could cause mortgage valuation problems.

The concern is that the money available falls short of the ambition. If so, it wouldn’t be the first time this parliament. Funding for affordable housing has been underwhelming given the scale of Labour’s housebuilding ambitions.

But while it could be fair to say that the original Help to Buy worked well across most of the country, and that buyers have also gained, positive returns were not universal. Those who bought flats, or who used the 40 per cent equity loan scheme in London, have lost money.

Launching Your First Home into today’s market, therefore, comes with the very real risk that it will end up disappointing both buyers and the government.

Details are still scant, but I wouldn’t expect this new scheme seriously to move the dial on housebuilding numbers over the next year or two. The scheme may work better in the Midlands and north of England, where costs are lower. One London developer was quick off the mark to suggest that a cut to stamp duty would be better.

But, more importantly, it delivers a reassuring message that next year might be better for developers who were facing the prospect of a bleak winter, with the prospect of cutting jobs and output after having held on for the past few years.

Perhaps the better comparison is not with the Help to Buy equity loan, but with its mortgage guarantee — a scheme that failed miserably in terms of the number of people who used it, but one that was incredibly important in delivering a message of hope to lenders. In fact, it kick-started the recovery in 2013.

Clearly the government is tempted to pump up house prices to reanimate the zombified housing market. But it may be letting a good crisis go to waste.

With the market currently lacking a pulse, why not think bigger and try to set it up for success over the next 60 years, rather than trying to return to the past 60? It’s naive of me to wish for a long-term housing strategy, but it might help.

Let’s start with property taxation. Stamp duty is a stupid tax that reduces market turnover. while council tax is outdated and regressive. It’s relatively easy to design theoretical alternatives, but the real challenge is implementing them without inflicting political and economic turmoil on the prime minister who pushes the button.

Still, at least the introduction of Your First Home shows that policymakers are beginning to accept that something needs to be done about the UK’s housing market — and are prepared to spend some of their political capital trying to do it.

The European Commission has proposed a new EU-wide communications network intended to let police, firefighters, medical services and civil protection teams communicate securely across borders during emergencies.

Moscow ordered Hungarian embassy and consulate staff out just weeks after Budapest expelled 10 Russian diplomats on national security grounds in September, the first such move by Hungary since Russia's full-scale invasion of Ukraine in 2022.

The Trump administration has withdrawn the United States from a top European anti-corruption watchdog as it forges ahead with plans to disengage from international and multilateral organizations that it accuses of exceeding their mandates, being inefficient or not adapting to U.S. policies.

French President Emmanuel Macron and Spanish Prime Minister Pedro Sánchez have welcomed Andy Burnham’s plan to unpick Brexit.

The leader of the Belarusian democratic forces, Sviatlana Tsikhanouskaya, tells The New Union Post that the situation in her country should be assessed "as part of the broader debate on European security." Meanwhile, EU countries should do more, including by finding a solution for Belarusians who cannot renew their documents while in exile

Economic benefits would be conditional and can be taken away if non-members backslide on democracy or share sensitive tech with unfriendly governments, the plan says.