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Estimating the true cost of the snow
The UK has experienced a record amount of snow this week – on Monday 2 February the South-East experienced its largest snowfall for 18 years. Yet while many around the country have relished the opportunity for a ‘snow day’ this week and children have loved having time off school, commentators have been trying to estimate the cost of the snow to the country. The Federation of Small Businesses (FSB) estimated that 6.4 million people took the day off last Monday – a fifth of Britain’s workforce. The FSB estimates that this day alone cost the British economy £1.2 billion, yet trying to put an accurate figure on such a thing is never going to be an easy job.
Let’s now review the other top money stories of the past week commencing the 2nd February 2009.
Monday 2nd February
The People’s Bank? – The government announced today that it is considering extending the financial services offering currently provided by the Post Office, to create a ‘People’s Bank’. It is hoped that the creation of a ‘People’s Bank' will stimulate lending, which would go towards relieving the lack of credit available in the UK economy at the moment. Many commentators have sighted the lack of lending in the economy as a key reason for the continuation of the credit crunch. As yet the government has not stated the form which these extended financial services will come in and the government has also failed to say whether any ‘People’s Bank’ will offer the same government guarantees to savers as the high street banks do.
Fraud reaches a record high in 2008 – According to a survey conducted by KPMG, fraud reached record levels in 2008 with £1.1bn worth of fraud cases being heard in the UK courts last year. This is the highest level of fraud seen since 1995 and KPMG predict that instances of fraud will increase further during the credit crunch. One type of fraud is identity theft and moneybasics has some useful information about identity theft and what to do if you find yourself a victim of it.
Let’s now review the other top money stories of the past week commencing the 2nd February 2009.
Monday 2nd February
The People’s Bank? – The government announced today that it is considering extending the financial services offering currently provided by the Post Office, to create a ‘People’s Bank’. It is hoped that the creation of a ‘People’s Bank' will stimulate lending, which would go towards relieving the lack of credit available in the UK economy at the moment. Many commentators have sighted the lack of lending in the economy as a key reason for the continuation of the credit crunch. As yet the government has not stated the form which these extended financial services will come in and the government has also failed to say whether any ‘People’s Bank’ will offer the same government guarantees to savers as the high street banks do.
Fraud reaches a record high in 2008 – According to a survey conducted by KPMG, fraud reached record levels in 2008 with £1.1bn worth of fraud cases being heard in the UK courts last year. This is the highest level of fraud seen since 1995 and KPMG predict that instances of fraud will increase further during the credit crunch. One type of fraud is identity theft and moneybasics has some useful information about identity theft and what to do if you find yourself a victim of it.
Tuesday 3rd February
Local authorities to provide mortgages – Back in the 1970s and early 1980s local authorities were a major mortgage provider – in 1980 some 600,000 borrowers had a mortgage with their local authority. Yet legislation introduced in 1985 meant that councils could only lend at the national standard rate of interest – which then was very high - so taking out a mortgage with your local authority became much less popular. For example, in February 2008 local authorities wishing to offer home loans were forced to charge 6.89%. However, today the government has reduced the minimum interest rates that local authorities must charge when providing a mortgage to 3.93%. This lowering of the interest rate now means that local authorities can offer mortgages which are competitive with mainstream mortgage providers. Birmingham, Liverpool, Portsmouth and certain local councils in London have expressed interest in mortgage lending and the introduction of mortgage lending to local authorities services should enable some people to get onto the property ladder.
Mortgage repayments missed by 900,000 homeowners - Research conducted by moneyexpert.com has revealed that more than 900,000 homeowners missed at least one mortgage repayment during the last 6 months, a 95% increase compared to this period last year. This has raised concern as these figures could indicate that repossessions could exceed the 75,000 that were forecast for 2009 by the Council of Mortgage Lenders (CML). If you're worried about meeting your mortgage repayments and fear repossession then Credit Action has some resources to help you.
Local authorities to provide mortgages – Back in the 1970s and early 1980s local authorities were a major mortgage provider – in 1980 some 600,000 borrowers had a mortgage with their local authority. Yet legislation introduced in 1985 meant that councils could only lend at the national standard rate of interest – which then was very high - so taking out a mortgage with your local authority became much less popular. For example, in February 2008 local authorities wishing to offer home loans were forced to charge 6.89%. However, today the government has reduced the minimum interest rates that local authorities must charge when providing a mortgage to 3.93%. This lowering of the interest rate now means that local authorities can offer mortgages which are competitive with mainstream mortgage providers. Birmingham, Liverpool, Portsmouth and certain local councils in London have expressed interest in mortgage lending and the introduction of mortgage lending to local authorities services should enable some people to get onto the property ladder.
Mortgage repayments missed by 900,000 homeowners - Research conducted by moneyexpert.com has revealed that more than 900,000 homeowners missed at least one mortgage repayment during the last 6 months, a 95% increase compared to this period last year. This has raised concern as these figures could indicate that repossessions could exceed the 75,000 that were forecast for 2009 by the Council of Mortgage Lenders (CML). If you're worried about meeting your mortgage repayments and fear repossession then Credit Action has some resources to help you.
Wednesday 4th February
Food prices increase – According to the British Retail Consortium (BRC), the price of some foodstuffs are beginning to rise again. Figures released by the BRC today suggest that food inflation (a measure to see how quickly the price of food is rising) increased from 6.2% in December to 7.5% in January. This increase in food inflation has been caused by the falling value of the pound, as a lot of food in UK stores is imported.
Food prices increase – According to the British Retail Consortium (BRC), the price of some foodstuffs are beginning to rise again. Figures released by the BRC today suggest that food inflation (a measure to see how quickly the price of food is rising) increased from 6.2% in December to 7.5% in January. This increase in food inflation has been caused by the falling value of the pound, as a lot of food in UK stores is imported.
Thursday 5th February
Interest rate is cut to 1% - The Monetary Policy Committee met today and announced that the Bank of England is to cut interest rates again to a record low of 1%. This decision comes after the UK officially entered recession at the end of December after two consecutive quarters of negative economic growth. Some business groups are sceptical of the interest rate cut and don’t believe that it will do much to aid the UK’s recovery from the economic crisis. Some mortgage lenders have already announced that they will not make any further cuts to mortgage rates. It seems that in reality this cut in interest rates is going to impact savers the most, with pensioners likely to feel the biggest impact.
Friday 6th February
Large increase in the number of businesses going bust - The Insolvency Service has confirmed that corporate insolvencies – i.e. businesses going bust - rose substantially in the last quarter of 2008. There were 2,428 insolvencies during the last 3 months of 2008, a rise of 220% when compared with the same period in 2007 and there were also 19,100 people declared bankrupt, representing a 22% rise from the same period in 2007. Both of these figures give a stark picture of the effect the economic downturn is having on the UK. Unfortunately, these figures are expected to continue rising during 2009. moneybasics has more information about the facts of bankruptcy.
Prepared for moneybasics by Joanna Parsley, Advocacy Officer (Credit Action).
Interest rate is cut to 1% - The Monetary Policy Committee met today and announced that the Bank of England is to cut interest rates again to a record low of 1%. This decision comes after the UK officially entered recession at the end of December after two consecutive quarters of negative economic growth. Some business groups are sceptical of the interest rate cut and don’t believe that it will do much to aid the UK’s recovery from the economic crisis. Some mortgage lenders have already announced that they will not make any further cuts to mortgage rates. It seems that in reality this cut in interest rates is going to impact savers the most, with pensioners likely to feel the biggest impact.
Friday 6th February
Large increase in the number of businesses going bust - The Insolvency Service has confirmed that corporate insolvencies – i.e. businesses going bust - rose substantially in the last quarter of 2008. There were 2,428 insolvencies during the last 3 months of 2008, a rise of 220% when compared with the same period in 2007 and there were also 19,100 people declared bankrupt, representing a 22% rise from the same period in 2007. Both of these figures give a stark picture of the effect the economic downturn is having on the UK. Unfortunately, these figures are expected to continue rising during 2009. moneybasics has more information about the facts of bankruptcy.
Prepared for moneybasics by Joanna Parsley, Advocacy Officer (Credit Action).
| Top Money Stories February 2nd - 6th 2009 |
