Archive for the ‘UK Debt’ Category
Households and companies are having a safety first approach to debt reflecting in the UK economy. There are outstanding debts on many clients’ overdrafts and personal loans of an outstanding amount £52bn; this is the lowest seen since 10 years ago.
However there has been a report that mortgage approvals have increased in July. Debt repayment by companies was outstripping new loans. People are using existing funds to cover payments instead of borrowing more.
Household income is showing a huge drop this month and may return to 2004 levels. This is the biggest drop in income in the past 30 years, recent economy reports have recorded an average fall of 3% this year for incomes. This is the steepest drop since 1981 and has also taken levels back to comparison to 2004.
Due to low inflation and higher social benefits household incomes actually rose through the recession according to the institute for fiscal studies. However the IFS report are showing different details as they believe that both the recession and higher inflation will lead to the income to be decreased.
High street retailers are going to facing some tough times as finance for families are getting tighter. Prices for everything are looking to be rising, inflation is soaring and subdued pay rise mean that households have less to spend.
Due to this many households with be cutting down on their spending and trying to make sure they have as much money as need and this will have a huge impact on retailers. Many small shops that are unable to beat competitive prices will be hit the hardest.
Buy to let mortgage reports have shown that the high demand of tenants has rose in the start of 2011. 49% of landlords said that the demand for properties from tenants had rose compared to 5% of landlord that said it had fallen.
The amount of demanding tenants has increased throughout the last seven quarters. Showing a demanding 40% in the end of 2010, landlords are expecting the demand for properties still to rise over the next twelve months.
Paragon chief executive, Nigel Terrington has said that “Landlords are experiencing high levels of tenant demand, and this is expected to rise due to social housing reforms, lifestyle choices, low numbers of first-time buyers and wider demographic changes.
Worldwide property groups have undertaken a survey throughout March and have focused their survey on house prices, interest rates, general confidence, buying intentions and views on property as an investment, all these factors have made a conclusion that 84% of the people surveyed believe it is now the right time to purchase properties.
The last time survey results showed a percentage this high was back in November 2010. 58% of people believe that the low interest rate has increased their desire to purchase a property and 65% believe that they are benefiting from the low level interest rate.
Official figures have shown that the UK government have borrowed less than they predicted in the last financial year. According to the office of National Statistics the public sector net borrowing was £18.6bn in March, and the total borrowing for the financial year was £141.1bn.
The actual forecast that was given by the government was £145.9bn and this was provided by the Office for Budget Responsibility (OBR).
George Osborne, Chancellor has said that borrowing is expected to fall to £122bn next year and is also trying to stop the rise in VAT and cut government spending. Many borrowers will be watching the figures over the next few months to access the impact on the economy.
Bank base rates sticking at 0.5% as a vote took place with policymakers and high volumes have voted to keep it on hold this month.
Three members of the policymakers were out voted as they wanted to increase the base rate but this was declined as the inflation outlook had not made a dramatic change so MPC (Monetary Policy Committee’s) believed that if there was a change in the base rate then spending would decrease dramatically causing a turn for the worst in the current circumstances. Result of the vote showed that the members wanting to increase the base rate were looking to increase to at least 0.75%, Andrew Sentence even suggested an increase of 1%.
Increasing Uk firms are now showing financial stress from a report out today.
There is a Red Flag Alert which shows indicators of Company woes today released by Corporate recovery experts.
There is a “significant” number of firms in “critical” financial stress in the first quarter of 2011.
There are many problems within the leisure sector in particular.
The 15% rise in most forms facing financial trouble was partially down to public spending cuts, and face possible job losses.
Bars and Restuarants, were the most sector to be hit, companies are facing monetary issues and have rose by 68% in the first quarter of 2010.