Financial Packages Must Filter Through Says Age Concern

Thursday, November 20th, 2008

It is vital that governmental plans to lift the UK economy out of a recession provide adequate support for older generations, Age Concern has warned.targ

According to the charity, the government is at risk of plunging a generation of people into financial difficulty unless arrangements are made to protect them in the upcoming pre-Budget report. The group warned that because older people often face higher inflation costs and can struggle to meet the costs of keeping homes warm during the winter, there is a danger that they will be particularly hard hit if the UK enters into a recession.

It noted that while provisions such as lowering income tax will likely be welcomed by many families and workers, it will have very little impact on those of pensionable age. As such, Age Concern warned that specifically targeted measures were needed to support older people through this difficult period.

Among the recommendations made was the introduction of a higher winter fuel payment subsidy, in addition to increases in the basic state pension and pension credits. It noted that such a move was necessary to reflect the real rates of inflation that old people are commonly exposed too. By enforcing such measures, it is possible that older people could find the strain on their finances is reduced, allowing them to meet other costs such as food bills or outstanding personal loan and credit card payments more easily.

In the meantime, Age Concern warned that half of all pensioners are cutting back on essential items such as food and clothing in an effort to make ends meet, while some ten per cent have been forced into debt as the credit crisis and soaring inflation have become an indomitable burden.

Commenting on the situation, Gordon Lishman, director general of the organisation, urged: “Millions of older people will be looking to the government to deliver a pre-Budget report that lives up to its rhetoric on fairness and eases their financial pressure and uncertainty. Alongside tax cuts, which are unlikely to help the majority of pensioners, the chancellor must also announce specific measures to help pensioners such as increases in the winter fuel payment and pension credit that truly reflect the high cost of living. The government must ensure that its fiscal stimulus package does not ignore the needs of millions of older people who are quickly running out of ways to pay their bills.”

Meanwhile, Age Concern also called for improved protection for those who are nearing the end of their working life after research indicated that older employees are likely to bear the brunt of the majority of redundancies as the country heads into a recession. In such a scenario, it could be possible that more people are caught out by the pensions pinch. According to the Life Trust Foundation, increased life expectancy presents a growing risk that millions of older workers will be unable to save for their retirement. The group warned that the current economic climate has exacerbated this problem as people have begun saving less as their incomes are absorbed by food and fuel bills, in addition to other commitments such as mortgages, personal loans and credit card repayments.

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Drivers Losing Millions In Roadside Gamble

Wednesday, November 19th, 2008

Britons could be putting themselves in financial jeopardy as a result of taking a chance with breakdown cover, the AA has warned.

According to the group, motorists are collectively forking out more than 120 million pounds to cover the cost of breakdowns as a result of their decision that roadside recovery insurance is an unnecessary expense. The group warned that this game of “roadside roulette” has ended with more than two million people around the country footing the bill for breakdown assistance. It went on to claim that while drivers may be able to cut down the costs of motoring in the short term by cutting back on recovery insurance, some have found themselves facing costs three times higher than the typical policy to have their vehicle towed in an emergency.

For drivers who are on the lookout for a new vehicle, taking out a car loan may prove an effective way of purchasing the motor of their dreams without putting undue strain on other areas of financial commitment. Indeed, the financial flexibility that a loan provides could allow people to meet costs of breakdown cover and comprehensive insurance in order to ensure that they are protected in the event of an emergency.

Indeed, the AA warned that while more people may be looking to cut back as the credit crisis rumbles on, skimping on breakdown cover may end up putting an additional burden on already stretched purse strings.

Andy Taylor, winner of AAs Patrol of the Year award, advised: “It might seem tempting to save a few quid now and gamble that your car will carry you through the downturn without crunching to a halt - but driving without breakdown cover is like roadside roulette. It will cost you dearly if you break down - in money, time and sheer stress. Just ask those who have lost 120 million pounds in the last year - thats enough to buy 12,000 new cars. Battery and tyre problems and mishaps with keys cause a third of all breakdowns and can strike at any time, regardless of the age or type of car.”

The AA went on to claim that those without breakdown cover may wish to apply for a policy quickly as the peak breakdown period is approaching. It warned that as the weather grows colder, there is a sharp rise in the number of engine failures and other faults. As an example, it noted that extended use of car heaters and lights means that drivers are more than twice as likely to run down their cars battery as they are during the summer.

Elsewhere, LV= has also urged consumers who are considerate of high car costs to make sure they clear out their car to avoid attracting the attention of thieves. It noted that approximately a quarter of all motorists had had their car broken into in recent months.

For those who are searching for a new vehicle, taking out a car loan could afford people the flexibility to invest in optional extras such as alarms and immobilisers to deter would-be thieves.

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Homes Must Not Be Neglected In Battle To Protect Livelihoods

Tuesday, November 18th, 2008

As the country teeters on the brink of recession, Abbey has urged people not to forget the importance of home insurance cover as they attempt to safeguard their financial security.

The firm explained that while many consumers main priority may be incubating their nest egg during these difficult times, it is likely that as people become more hard done by, there is likely to be a rise in the number of burglaries.

According to the group, there is a historic link between the financial fortunes of the country and the rates of burglaries and other instances of theft. Its records show that during the last recession, between May 1990 and March 1992, the number of residential break-ins rose by 33.8 per cent. So too, official figures from the British Crime Survey also show a similar heightened risk of burglary.

And in recent months, home secretary Jacqui Smith has warned that Britain may again need to brace itself against an impending spate of burglaries as more people are driven to the wall financially. In a public letter written in August this year, she alerted homeowners to the link between economic adversity and rises in acquisitive crimes such as burglary, theft and robbery.

Meanwhile, Abbey warned that those consumers who lack adequate insurance could find the stress of being burgled compounded by the financial constraints of replacing stolen items. This in turn could impact on their ability to make mortgage contributions or pay off credit cards and personal loans. In a bid to prevent such a scenario, the group urged homeowners to take out cover quickly to avoid being caught out by the recession and a concomitant rise in crime.

Responding to Ms Smiths suggestion that burglary rates will rise seven per cent this year and a further two per cent in 2009, Thierry Campet, sales and marketing director at Abbey Insurance, said that the admission should serve as a warning to consumers without cover.

“When household budgets tighten and families look to cut back on financial expenditure there are the usual outgoings that people feel they can cut back on. Wrongly, many people believe home insurance is one of these. However during these times, protection is increasingly important and should not be overlooked. At this stage, not many insurance policies provide cover for an unlimited amount. Policies without this provision may not cover you for the full amount of your home contents. Look for peace of mind with an unlimited sum policy,” he advised.

For those without such cover, it is possible that structural repairs and replacement of items will have to be covered using personal loans or existing savings.

Consumers who are concerned about the rising risk of burglary may wish to apply for a home improvement loan in order to boost their home security. Indeed, such measures could prove particularly useful during the winter months. According to Halifax, there is a sharp rise in the number of break-ins witnessed during this period as burglars take advantage of the extended hours of darkness.

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The Richest Streets In Britain Revealed

Monday, November 17th, 2008

Britons who are on the hunt for a cheap property in the current adverse financial climate may do well to avoid Kensington and Chelsea, it has been revealed.

New figures from Halifax note that while the famous London borough has long been considered a haven for the rich and famous, half of all the top 50 most expensive streets in Britain are located there. And while there are plenty of high-value postcodes found in the area, residents in the Vale may take a certain satisfaction in knowing that they live on the most expensive road in the country. According to the financial services provider, the typical house price on this street totals 4.68 million pounds, more than 200,000 pounds dearer than its nearest rival, which is Ingram Avenue in Barnet.

For those people who are setting their sights a little lower as they look to put their foot on the first rung of the property ladder, taking out a cheap loan may prove an effective way to boost deposits and make their offer more appealing to lenders during this difficult period.

And for homeowners looking for cheap property in the capital, they may find plenty of houses that are out of their price range after Halifax figures showed that 39 of the 50 most expensive roads were located in London. Meanwhile, house hunters may also like to avoid the south-east and Poole in the south-west, as these areas filled out the remaining 11 positions in the top 50 most expensive postcodes.

Indeed, Panorama Road in Poole was the only street outside of London to make an appearance in the top five, with house prices there totalling a typical 4.16 million pounds, putting it in fifth position, behind two more Kensington and Chelsea postcodes which came in fourth and third.

Commenting on the preponderance of the borough of Kensington and Chelsea addresses in the list, Martin Ellis, chief economist at Halifax, said that the area had always been considered a cool place to live among celebrities, although in recent years house prices may have received a further boost from the financial sector.

“Chelsea and Kensington have some of the most expensive streets in England and Wales. The Royal Borough has been a highly fashionable area to live in since the swinging 60s. In recent years, its prime location in central London has attracted affluent celebrities and ultra wealthy foreign businessmen helping to drive up house prices,” he said.

For buyers who have struggled to get ahead in the property market in recent months as access to cheap mortgage lending has dwindled and acceptance criteria has tightened up, taking out a personal loan may prove a lucrative weapon in the battle to secure the keys to their own home. By boosting the size of their initial deposit, consumers could find they are able to encourage banks to extend a competitive mortgage deal for the purchase of a new property. Opting for a loan for this purpose may become increasingly important after the Council of Mortgage Lenders warned that the availability of home purchase loans may constrict further as the country moves towards a recession.

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Britains Financial Standing Slumps

Friday, November 14th, 2008

The nations financial wellbeing has hit a record low, it has been revealed.

In figures released by the Alliance Trust Research Centre in its latest financial reality index, it was indicated that the standing of British households economic situation plummeted during the third quarter of this year. According to the research centre, the score tracking consumers fiscal standing continued the sharp decline that had first begun in 2007 reached 43.4 - the lowest point it has ever recorded since it began the research more than ten years ago. Such a figure, it was also revealed, is below the “critical” level of 100. Overall, declines in all three of the indices that consist of the organisations financial reality index were noted.

It was noted that a particularly dramatic fall occurred within the sub-index tracking British households budgets. This measure of the financial reality index was shown to have fallen from the 31.9 noted in the second quarter of this year to stand at 22.9 between August and October. Such a figure, the Alliance Trust Research Centre reveals, is an all-time low and is a continuation of the indexs habit of being “consistently below” the critical 100 level that has been seen since 2002. Such a fall was reported to be driven a by fall in real earnings and inflation for basic goods reaching 15 per cent.

Meanwhile, the net wealth index was revealed to have fallen by some 34.6 points during the last three months to stand at 6.9. The decline was largely attributed to dropping property prices and equity values over the course of this year, which in turn have contributed to “drastically reducing” consumers net wealth. Meanwhile, the increasing unemployment rates and a slowdown in gross domestic product growth have resulted in the economic background index dropping from 122.6 to 114. This fall, it was pointed out, is the fourth consecutive quarterly decline.

As a result of such negative figures with regards to finances, it may be possible that consumers find they are increasingly struggling with keeping up with various monetary commitments. Such areas could well include personal loans, credit and store cards, household bills and mortgage repayments.

Commenting on the figures, Shona Dobbie, head of the Alliance Trust Research Centre, said: “Our financial reality index shows very clearly how greatly the drop in household wealth over the last quarter has hit consumers financial wellbeing. Sharp falls in house prices and share prices mean it is the household wealth index that performed worst last quarter, alongside the other two key factors that are families budgets and the economy. Poor figures across the board in all three categories mean that consumers are now facing the worst financial reality in the course of our 11-year study.”

It was stated that since the index was launched the research centre has witnessed a “very close relationship between consumer spending and financial reality”.

Ms Dobbie added that during the past three years this trend has been impacted upon by those Britons who have continued to “spend despite increasingly worsening financial circumstances”. However, it was stated that people are now beginning to get a realistic grip on their finances and are starting the process of spending within their means once more.

For those consumers holding concerns about their ability to manage their money in the months to come applying for a cheap loan might prove to be of assistance. By selecting this kind of loan, borrowers could find they can meet various spending commitments - such as mortgage arrears and outstanding credit card bills - quickly, allowing them more disposable income at the end of each month. This could prove to be particularly useful after Axa recently revealed that some 20 million Britons have dipped into their savings schemes in order to meet various costs over the course of this year.

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Workers Queue Up To Ply Their Trade Abroad

Friday, November 14th, 2008

Nearly one third of Britons have been employed overseas at some point in their lives, new figures have shown.

According to Lloyds TSB, Europe is the most common destination for those who have jumped ship and earned a living abroad, with more than half (56 per cent) of people doing so. However, a fifth (20 per cent) of Britons have headed further east, going to work in Asia. Furthermore, nearly the same proportion (18 per cent) said that they had worked both in North America and the Gulf.

For those who are planning on heading abroad in the coming months, whether for work or leisure purposes, taking out a personal loan may prove an effective way to pay for travel and accommodation during the early days of such a trip. This type of loan may be of particular interest to those who are heading abroad to expand their career horizons, with nearly a quarter (24 per cent) of those Brits who have done so citing this as the primary reason for leaving. Meanwhile, 25 per cent said that working abroad was necessitated by a new job. However, nearly a third of people said they were drawn overseas to absorb new cultures and experiences.

However, Lloyds TSB was quick to point out, moving overseas to take on a new job sometimes left people in difficulty. While more than half (53 per cent) said that they had trouble being away from friends and family for extended periods, some experienced problems dealing with lifes financial practicalities. Of those questioned, a fifth said that they had difficulty setting up bank accounts, managing their mortgage and making payment arrangements on items such as credit cards, personal loans or other debts owed in the UK.

Commenting on the findings, Stephanie Cousin, head of operations at Lloyds TSB International, said: “Were certainly a nation of intrepid travellers and whether its to gain international work experience or simply escape the weather, its clear that many of us may be working overseas for part of our career. Living away from home can be stressful, so you need to do your homework and sort out the important things, like finances, before you depart.”

Doing so may be of particular importance to men after further findings from the group showed that they are almost twice as likely to work overseas as women are. While some 22 per cent of females said they had done so, 42 per cent of males said they had spent time abroad working.

Whether planning a winter getaway or preparing themselves for an occupational exodus, consumers who are planning on going abroad may wish to take out a personal loan to help cover costs. Meanwhile, a loan may also be of use to those who have got their sights set on overseas adventure after a study by Cater Allen Private Bank revealed that more than half (54 per cent) of British holidaymakers plan their trip with a view to doing some form of activity such as scuba diving, skiing or horse-riding.

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Consumers Cannot Put Cash Aside Says Nationwide

Thursday, November 13th, 2008

Millions of Britons feel they are not putting enough money aside to save for a rainy day, Nationwide has found.

According to the group, one quarter of respondents to a recent study felt they are able to save a sufficient amount, while just over half (52 per cent) were hopeful that they would be in six months. However, while it noted that relatively few people feel they are in a sound position at the moment in terms of stashing spare cash, there has been a slight increase in the number of people who are optimistic about their saving prospects over the next half year. It noted that last month, fewer than half (47 per cent) of people said they were confident they would be saving enough in six months. It noted that this five per cent improvement could be taken as a positive sign of growing consumer confidence, particularly considering that the festive period - one of the most expensive times of year - is drawing near.

For consumers who are unsure of their ability to meet Christmas costs this year as adverse economic conditions have stifled cashflow, taking out a cheap loan may be an effective way to do so.

And while consumers may be cautious about paying off personal loans and other such responsibilities, Nationwide has noted that there has been a marked increase in peoples perceptions of their future economic situation. It claimed that last month, the expectations index - which is used to measure sentiment surrounding economic prospects - registered a 17 per cent increase. Nationwide claimed that this rising confidence may be a strong contributing factor to the growing belief that people will have more disposable cash to save in six months.

Commenting on the figures, Matthew Carter, director of savings at the company, said: “The fact that half of consumers are still failing to save or are only saving occasionally is a concern [...] However, our latest research shows a slight increase in the number of people who are feeling positive that they will be able to save the correct amount in the future, which is small step in the right direction. I hope more consumers put firm savings plans into action soon. The current financial climate will have raised awareness about the importance of having savings and we hope this, combined with joint industry and government education programmes, will encourage people to save regularly going forward.”

For those who are struggling with costs as the Christmas period approaches, taking out an unsecured personal loan may be an effective way to purchase presents, food and wine without risking defaulting on other payment responsibilities. And with a low-rate personal loan, consumers could even put any money left over into a high-interest savings vehicle to shore up their finances as a year of economic turbulence comes to an end. Parents may also like to send some money their childrens way to teach them the value of saving after Halifax revealed that many youngsters feel their pocket money is insufficient to support their spending habits.

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ONS Tracks Rise In Unemployment

Wednesday, November 12th, 2008

The proportion of people in the UK who are out of work has risen, new figures from the Office for National Statistics (ONS) have shown.

In the period from July to September 2008, the group recorded rises in the number of unemployed people and the number of Britons who are claiming benefits while they are out of work. Meanwhile, the number of available jobs has fallen, indicating that employment opportunities are contracting in line with the overall economy.

For the three-month period, the rate of unemployment in the UK stood at 5.8 per cent of the total number of people who are economically active. This represents an increase of 0.4 per cent on figures for the previous quarter and 0.5 per cent over the year. This amounted to an additional 140,000 people entering unemployment during the course of July to September.

As more people enter unemployment, it is possible that a growing number begin to experience difficulties keeping up with financial responsibilities. Such areas of commitment could well include mortgages, credit cards, utility bills and personal loan repayments.

Indeed, the ONS noted that as the number of people who are out of work rose, so did the number of people claiming jobseekers allowance, indicating that Brits are keen to tide themselves over while look for more work.

And while the statistics have caused alarm in some circles, the Department for Work and Pensions (DWP) has urged consumers to remember that in a relative sense, the employment position in the UK remains strong.

The organisation stated that there are thousands of jobs still available, while governmental funding can support people while they search out new work.

Tony McNulty, minister for employment, said: “Every time a worker loses their job it is a personal tragedy and the government is doing everything it can to get those people who have become unemployed back to work as quickly as possible. People who are worried about the current downturn need to know that there are jobs out there - the claimant count may be rising, but large numbers of people are also moving off benefits and into jobs. Those people who do find themselves unemployed are getting real help early on and today we are doubling the funding for Jobcentre Plus.”

For those who have been struck off in recent months as the world enters a period of economic slowdown, the DWP assured people that there are plenty of opportunities to re-enter the workforce. It explained that more than 10,000 job postings are generated through Jobcentre Plus everyday, while other regional recruitment portals produce thousands more. During the three-month period to October, it estimated that there were 389,000 unfilled vacancies.

Meanwhile, commenting on ONS figures showing that the country has entered a period of economic contract, independent financial advice site the Motley Fool warned that many Britons are struggling to put money aside for the future as payment responsibilities wipe out their wages. For those who have found themselves in such a situation, taking out a debt consolidation loan may be an effective way to get back on the road to financial recovery.

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Britons Tell Fibs About Finances Says Study

Tuesday, November 11th, 2008

While money has often been considered a private matter, a new study suggests that when it comes to discussing their financial position, many Britons are less than truthful.

According to AXA, more than one in three UK residents have misled a partner, friend or familymember about the stability of their finances. Furthermore, the group warned that with the global economic outlook appearing less rosy, many more may feel it is necessary to spin a few tall tales when it comes to discussing their cashflow position.

However, a leading psychological expert has claimed that now is actually the perfect time to come clean about debts and look to take a fresh approach to managing money. Commenting on the findings of the AXA study, Andrew Kinder explained that hiding the facts about financial insecurity is likely only to exacerbate them in the long term.

Indeed, he warned: “This is the worst possible time to be in denial about your finances. Unburdening your financial transgressions, even anonymously, can be a crucial first step to taking better control. There is often much more behind a deception, even a relatively trivial one. You tend to find that when people make a confession theyre much better able to deal with these underlying problems.”

For those who have found themselves overburdened by mounting payment responsibilities in recent months, taking out a consolidation loan may prove an effective tool in scaling the debt mountain. In applying for this type of loan, consumers could find they are able to stretch repayments over a longer period, thereby increasing monthly cashflow and reducing the likelihood of being drawn further into the red by missed payment charges.

Meanwhile, Alison Green, a spokesperson for AXA, urged people to come clean about their finances, claiming that the only people they are deceiving are themselves.

“With harsh times ahead, people are likely to be in an ongoing cycle of panic and denial. Now is the ideal time to come clean and kick-start a more proactive approach to managing your cash and planning for the future,” she commented.

Further findings from the group indicated that it was common for many people to hide major purchases from their friends and family, with one parent even confessing to raiding his childs savings account and claiming that the money was a bonus from his work. His actual bonus had been cancelled as the credit crunch bit down.

Meanwhile, another lady who responded to the AXA study said that she had splashed out 70 pounds on face cream and decanted it into the bottle of a cheaper product to hide the purchase. Another respondent said that she had felt it necessary to lie about the size of her paypacket because her partner hoped to live off her income.

For those who have not been able to cope with the costs of supporting their household as bills rise and access to credit diminishes, taking out a debt consolidation loan may prove an appealing way to get back on their feet financially. Applying for a consolidation loan may be necessary for a growing number of Brits, as a study from the Motley Fool warned that many residents are unprepared to cope with a recession.

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Trouble Galore For Store Card Fans

Monday, November 10th, 2008

As the festive period approaches, many consumers may be tempted to put a few purchases on a store card. However, Money Expert has warned that doing so could leave their finances with a nasty hangover in the new year.

Indeed, it noted that the most expensive store card is now charging borrowers more than 30 per cent annual percentage repayment (APR), meaning that people may do better to pay for presents with cheap loans or credit cards if they are short of cash in the run-up to Christmas. The independent advisers probe into the state of the store card market comes after a critical report by the Competition Commission, which said that many providers were making “excessive profits” on the back of unfavourable credit card rates.

It noted that in recent times, both Principles and Oasis store cards have been hiked by four per cent, taking their APRs to 28.9 per cent. Money Expert warned that the top half of the market offers an average APR of over 27 per cent, more than one a half times more expensive than typical credit card rates, which stand at 16.9 per cent. Meanwhile, only one store card - from Fortnum and Masson - was found to offer rates lower than standard credit card APRs.

After being hit by larger than expected store card bills in the wake of Christmas and new year celebrations, consumers could find that their ability to manage other areas of financial commitment comes under strain as 2009 gets underway. Areas of difficulty could well include keeping up with mortgages, credit card and personal loan rates.

Indeed, Sean Gardner, director of Money Expert, warned that people need to be alert to the large repayment responsibilities wrapped up with store cards.

“Store cards can be a useful way of qualifying for instant discounts but when it comes to borrowing they are a complete rip-off. The fear must be that with other forms of credit running dry, desperate consumers will be tempted into expensive deals as a last resort for Christmas. As soon as the interest-free periods expire, store card users will face huge APRs. Many will plan to pay it off but our research this time last year showed that one in ten were still clearing Christmas debts incurred 12 months previously,” he said.

The website noted that many cards will attempt to lure people in with prizes, discounts and previews, in addition to zero per cent APR offers for limited periods.

However, it explained that in the main, these still do not compare favourably with credit cards, 64 per cent of which boast zero per cent periods lasting between three and 12 months. So too, with credit cards, APRs after this period are substantially lower, the group claimed.

For those who have been caught out by rising debt levels as cheap credit has dwindled, taking out a debt consolidation loan may prove an appealing way to get finances back on track. Indeed, consumers may find themselves struggling to clear off debts racked up over the summer after Alliance & Leicester warned that store cards cost consumers considerably during the holiday sales.

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Bank Makes Historic Cut

Friday, November 7th, 2008

The Bank of England has made the biggest cut to the base rate of interest in its history in an attempt to stimulate economic recovery.

At its monthly meeting yesterday (November 6th), the Banks monetary policy committee (MPC) decided to reduce the base rate by 150 basis points, taking it to three per cent, its lowest ever level since the creation of the group in May 1997. Before yesterday, the lowest base rate witnessed under the MPCs command was 3.5 per cent. Following the decision, homeowners may well see mortgage rates start to drop, in addition to personal loan and credit card rates.

Explaining its decision to make its largest cut ever, the MPC said in a statement that the UK and global economy had experienced the most severe disruption to financial stability witnessed in nearly a century. It claimed that while the recent raft of measures to inject liquidity into the banking system and ease the burden on struggling consumers has gone some way to mitigate the effect of the financial collapse seen in September, it is likely that the resulting adverse economic conditions will remain prevalent for some time to come. It noted that as a result of the banking crisis, many consumers will have found it more difficult to obtain credit and loans as lenders have become decidedly risk averse. So too, the group noted that equity conditions in countries throughout the world have also declined sharply in the last two months.

The Bank went on to note that in the UK, figures indicate that the country is likely to enter a recession, with data showing that the economy contracted during the third quarter of this year. It noted that there have been substantial declines in consumer spending as shoppers have found their finances challenged by high bills as credit and loan availability dwindled. So too, both the residential and commercial property market was found to have declined, while the prospects for new business investment have also worsened considerably.

It continued: "Since the beginning of the year, the committee has set bank rate to balance two risks to the inflation outlook. The downside risk was that a sharp slowdown in the economy, associated with weak real income growth and the tightening in the supply of credit, pulled inflation materially below the target. The upside risk was that above-target inflation persisted for a sustained period because of elevated inflation expectations. In recent weeks, the risks to inflation have shifted decisively to the downside. As a consequence, the committee has revised down its projected outlook for inflation which, at prevailing market interest rates, contains a substantial risk of undershooting the inflation target."

As such, it said that by reducing the base rate by such a degree, the UK should be able to avoid entering a period of negative inflation.

The move follows another historic cut made last month, when it slashed rates by 50 basis points a day ahead of schedule. This was the largest single cut made by the MPC. An announcement from the Bank followed a statement by chancellor Alistair Darling in which he called upon the MPC to consider the needs of Britons struggling during the downturn.

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Watchdog Says Banks Need To Put People First

Tuesday, November 4th, 2008

The government should take the opportunity to ensure that consumers are put at the heart of UK banks business model, Which? has insisted.

An announcement from the group came as it launched a major new campaign to reform the UK financial services industry. Research carried out by the firm has found that for many Britons, there is little faith that the current organisational structure of the banking industry can prevent another downturn from occurring. When questioned, more than four-fifths (81 per cent) of the 1,001 adults questioned by the group said that they thought reform is necessary to avoid the recent financial turmoil from resurging in the future.

Indeed, more than two-thirds (67 per cent) of respondents said that they blame the banks directly for the current economic contraction and the dwindling availability of credit and loans. Meanwhile, 73 per cent of people said that they had personally been exposed to banks and other loan providers offering money in an irresponsible manner.

Following the survey, Which? embarked on a new campaign urging the government to do more to ensure that consumers are protected from unsound lending practices and other similar problems. In a letter to chancellor of the Exchequer Alistair Darling, the group demanded that banks are required to do more to insulate their customers from recent corporate failures. Among the requests made by the watchdog was that all of the UK institutions which have received public funding as part of the recent bailout should be required to pass on cuts to the base rate of interest immediately. Such action could relieve strain on consumers by increasing the availability of cheap mortgages, personal loans and credit cards.

So too, the group also insisted that there should be an internal review into retail banking practices to make sure that the interests of UK customers are integral to the operations of all financial institutions.

Which? chief executive Peter Vicary-Smith commented: “Banks have had their bailout - now its time for them to deal sympathetically and fairly with the plight of ordinary consumers, many of whom are anxious about their savings or struggling with their mortgage. It is the governments duty, as a major shareholder, to ensure this happens. The government cannot afford to pass up this unique opportunity to make long-term, consumer-focused changes to the banking industry and in the short-term were after a fairer deal for consumers. We want to see an independent review leading to an overhaul of an industry that is characterised by weak competition [and] irresponsible behaviour.”

He said that many banks have a poor track record of making sure that customer services and support standards are up to scratch.

The announcement from Which? follows a raft of measures designed to add buoyancy to the banking industry. This was matched by a cut in the base rate of interest enacted by the Bank of Englands monetary policy committee, which slashed rates by 50 basis points last month. Such a move may soon be followed by a fall in mortgage and personal loan interest rates.

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Cover Keeps Cats Out Of Purrmuda Triangle

Monday, November 3rd, 2008

Following recent media reports that there has been an outbreak of catnapping in Woolaston in the West Midlands, Sainsburys has urged people to consider pet cover to help get their animal back should it go missing.

According to the group, there has been a recent spate of reports of cats going missing from six streets in the Woolaston area, earning it the nickname of the Purrmuda Triangle. However, it reminded pet owners that the problem of animal theft is not limited to this area. As such, it iterated the need to make sure that they were protected against such an occurrence by taking out a comprehensive pet insurance policy which offers financial support in the event of an animal going missing.

For those who fail to do so, forking out for extensive advertising campaigns in an effort to get their animal back could result in people finding their finances are put under pressure. This in turn could make it difficult for them to keep up with electricity bills, credit cards and personal loan repayments.

Meanwhile, Sainsburys reminded people that when they are picking out their pet policy, it is important that the supplier offers support when it is most needed. It explained that around a quarter of insurance providers do not provide support in the event of an animal going missing or being stolen.

Taking out cover which does provide this type of assistance may be particularly important for the nations cat owners, after Sainsburys claimed that felines are seven times more likely to go missing than are their canine counterparts.

Among the reasons listed for the reported rise in the number of catnappings in the UK is that many have a strong resale value. The group explained that while Bengal cats have become more popular in recent years, they may be a prominent target for opportunistic thieves as they commonly sell from 500 pounds to several thousand pounds.

Commenting on the findings, Neal Devine, Sainsburys pet insurance manager, said: “It is clear that the problem is rife in Woolaston, we hope someone will soon step forward with some information that will help the police get to the bottom of what is happening to these animals. Our research shows that cats are almost seven times more likely to go missing than dogs, but its very difficult to know for sure if a missing cat has been stolen, lost or suffered an accident. The scale of the problem is also underestimated because its not always reported to the police - only 12 per cent of people who have lost their pet over the past five years actually notified them.”

For those who have lost an animal, be it a pedigree pooch or a common tomcat, taking out a loan may afford people the financial security to buy a new pet quickly, while leftover cash could be put towards a comprehensive insurance policy in an effort to reduce the likelihood of such an event occurring again.

While the current economic crisis may be driving up the number of pet thefts, Ray of Sunshine has pointed out that for many, the credit crunch has actually brought communities together, with 33 per cent of people saying that they have come to know the names of their neighbours pets as they spend more time with other residents in their area.

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Recession Kicks In For Brits Struggling To Save

Thursday, October 30th, 2008

More than 20 million Britons lack the funds to put money aside during the current economic downturn, AXA has claimed.

According to the insurer, this proportion of people have resorted to whittling away at their savings since the beginning of the year, while only the top 20 per cent of wage earners throughout the UK have been able to avoid spending beyond their means. The group insisted that new savings ratio statistics showed that the minimum income on which people can put money aside now stands at 70,000 pounds, equivalent to 52,785 pounds after tax and benefits.

Furthermore, it noted that in the wake of the global credit crisis, it is important for consumers of all income brackets to be able to rely on sound financial practices which will help them to stay afloat as the economic storm clouds gather. Only with tangible solutions to financial hardships will consumers be able to overcome the anxiety of entering a recession, AXA claimed.

As such, the group invited people to take part in the annual My Budget Day, which aims to raise awareness of the importance and effectiveness of setting out a firm financial roadmap. Taking place on November 20th, the event will have particular significance in light of recent financial turbulence, the insurer said.

Commenting on the current problems facing “real Britain” today, Steve Folkard, a spokesperson for AXA, warned: “If only the richest members of society are managing to cope with their spending then we really need to consider how to improve the day-to-day financial health of British households. Talking about global issues is important but they need to be put in perspective with tangible solutions being offered to individuals. People are anxious about how to deal with their finances. You need to get into the habit of regularly reviewing your financial situation and My Budget Day is about kick-starting that habit.”

He added that people only need to spend an hour each month reorganising their finance and in doing so they will be able to put themselves on a much firmer footing. However, Mr Folkard claimed that currently, many Britons feel at a loss as to where to turn to for financial support. He warned that while many people are feeling the pressure, those who do not pursue a remedy could end up feeling disengaged and dejected, which in turn could lead to further financial problems.

For consumers who have seen their fiscal fortunes fall by the wayside in recent months, taking out a debt consolidation loan may prove an effective way to extend repayment commitments and boost monthly disposable income. Meanwhile, for those who have found their access to money dwindle as the crunch has rumbled on, applying for a bad credit loan may allow them to begin making regular repayments and repair their credit history and get back on better terms with their creditors.

While more people may have been feeling the pinch since the beginning of the year, childrens charity Ray of Sunshine has recently claimed that one upside of the economic turbulence has been that families and communities are now becoming more close-knit as they try to do battle with the crunch.

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BoE Says Attitudes To Risk Need A Fundamental Rethink

Tuesday, October 28th, 2008

Regulators and banking institutions across the world needs to reassess the way that financial risk is handled, the Bank of England (BoE) has warned.

In its biannual Financial Stability Report, the group claimed that the recent bust in the credit market had been far sharper than analysts had imagined. It explained that while some parties - including the Bank - had foreseen that the large scale extension of loans and credit to high-risk borrowers could cause problems for banks, investors and consumers, no one had predicted that the problem could grow so big.

And while it noted that central banks around the world have rushed to provide liquidity for lenders who have found their balance sheets dwindle in the recent economic crisis, the BoE went on to claim that in the long term, a “fundamental rethink” was needed to ensure that adequate safeguards are put in to place to stop such a situation arising again.

The group explained that while the loans and cash that was granted to UK banks would help to stabilise the countrys financial system in the near future, as the globe enters an economic downturn financial institutions will need to grow more cautious about how they provide loans, credit cards and other services. As such, the Bank warned that the growth in loans provision is likely to remain subdued over the coming years.

In the report, the group went on to iterate the scale of the recent financial crisis, which saw bank equity prices fall more heavily than was the case following September 11th, as well as the rise in interest rates in America seen in March 1994. Only Black Monday - which occurred in November 1987 - and the banking crisis of September 1974 were said to have had a bigger negative impact equity prices.

Following on from the report, the Council of Mortgages Lenders (CML) highlighted concerns that in the wake of the financial crisis, mortgage assets were being severely undervalued, which could further inhibit the provisions of loans for house purchase in the future.

Michael Coogan, CML director general, exclaimed: “We continue to find it frustrating that in the US, poor credit quality caused the funding crisis, whereas here in the UK the funding crisis has been a major cause of the worsening credit picture. Underlying UK mortgage credit quality has never been the primary issue, yet the reduction in funding to support new lending has had a detrimental impact on the credit quality of existing mortgages, through house price falls, a narrowing of options for borrowers and the prospect of rising unemployment.”

For those who are concerned about their financial security amid falling house prices, tightened credit and heightened risks of redundancy, taking out payment protection insurance may be of interest. Indeed, David Kuo, head of personal finance at independent advice service the Motley Fool, warned earlier this year that taking out such protection could become essential for Britons as loans and credit cards become harder to come by and the economy shrinks.

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