UK News

from From Reuters.com:

How has the credit crisis affected you?

The demise of Lehman Brothers a year ago sparked a collapse in financial market confidence and set of a series of reactions that have spread hardship into the four corners of the globe.

Reuters News has charted the key events and their impact in "Times of Crisis" -- a major new multimedia production on Reuters.com. (See it here.)

We'd like to add the experiences of Reuters readers. So, if you or your family have been affected by the events of the past year then use the comments section below to share your story.

from Left field:

Players, fans unite behind the Lions

All professional sportsmen talk about how important their supporters are but when it comes to the British and Irish Lions there really is a special bond.

Defying the credit crunch, up to 30,000 fans are expected to travel to South Africa to follow the Lions in their three-test series against the world champions.

Those fans, who spend most of their time in opposition as they follow England, Wales, Scotland or Ireland, are, like the players, united in one cause for a few weeks every four years.

They are united in colours too, as the red shirt of the Lions -- which adidas say will be by far their biggest seller of the year -- is everywhere.

The players appreciate the efforts made by the supporters and, unlike in most other modern professional sports, are not afraid to mingle with them.

Most of the Lions were out and about on Thursday and Friday, signing autographs, posing for photographs and, get this footballers, actually chatting about the sport they share a passion for.

When a police car slowed down as it approached a knot of fans surrounding Wales centre Jamie Roberts on Thursday it was merely to shout "what will the score be?" followed by a dismissive laugh when the fans suggested a 3-0 sweep for the tourists.

BA horror show should quell talk of “green shoots”

Willie Walsh likes to tell it as it is.

Recent weeks have seen smatterings of good economic news. Sectors that took the full weight of the recession last year said they were staggering to their feet now spring is here.

Retail: John Lewis had its best week of the year so far from 2nd-9th May.

Leisure: Pubs group Greene King said things have ‘generally improved’ since the start of the year.

Then along comes the British Airways CEO to spoil everyone’s fun.

“I see no signs of recovery anywhere,” Willie Walsh told BBC radio’s Today programme following publication of the airline’s full year results. “Globally we see economic conditions continuing to be very weak. We have a global network so we are operating in pretty much every country around the world, and what we see is pretty much the same everywhere.” Cheers Willie.

British Airways’ numbers are an absolute horror show. Having made a record profit in the year to March 2008, it managed to set another record last year – this time for losses. Its fuel bill nearly doubled to three billion pounds. It is losing passengers hand over fist, grounding planes, slashing thousands of jobs – Walsh himself has even waived a year end bonus.

from Left field:

Punters prepare for credit crunch-busting Cheltenham

Credit crunch? World financial crisis? Don't you believe it. The Cheltenham Festival, the highlight of the British jumps racing calendar, starts on Tuesday and millions of pounds will be gambled over four days of high-quality action.

Forget the glamour and fashion of Royal Ascot, this is where tweed adorns the shoulders of the English gentry and the Irish travel in their droves to roar on their equine superstars.

The Gold Cup steeplechase on Friday is the highlight of 26 races across the four days and by 1530 GMT we will know if Denman's victory last year was a flash in the pan.

A monster of a horse, Denman confirmed his immense talent by vanquishing 2007 winner Kauto Star but there is little confidence in the horse 12 months on.

The vibes for a repeat victory have not been good ever since the nine-year-old underwent treatment for a heart problem in September which was followed by a lacklustre reappearance at Kempton racecourse in December.

Since then Denman's odds have drifted out to around 6-1, a tempting price for part-owner and colourful professional gambler Harry Findlay.

Top 10 credit crunch trends: It’s cool now to use restaurant vouchers

Two-for-one restaurant deals and money off vouchers have shrugged off their “uncool” image as the credit crunch bites, according to a survey, and apparently even Wayne Rooney and wife Coleen McLoughlin have used at least one to get a half price evening meal, despite the Manchester United star’s 100,000 pound a week salary.  ******The practice – which used to carry a stigma – has topped a list of “cool money-saving options” adopted by people in the economic downturn.******Leaving reduced tips or none at all, buying own brand supermarket products and taking packed lunches to work also made the list.******The list of previously frowned-upon practices also includes selling things on eBay and shopping at discount stores such as Lidl and Aldi.******A spokesman from www.OnePoll.com who carried out the research said: ”We all seem to be embracing social habits that we would never have done last year as they were deemed ‘uncool’ or socially unacceptable. Paying by two-for-one vouchers would have had a stigma attached to it last year, yet now it’s almost more normal to hand over a money-off coupon when it comes to paying the bill at the end of the night. ******”Everyone is watching their pennies in the current financial climate so any possible money saving opportunities are being snapped up. Things that used to be considered tight-fisted such as failing to tip or buying own brand food is now common practice.”******The poll of 5,000 Brits revealed over two thirds of people feel the credit crunch has made them less judgmental about embracing money saving measures.******Seventy-two percent even admitted they secretly enjoyed saving money by adopting previously uncool customs. And 69 percent said the credit crunch has actually encouraged them to think about their financial future for the first time in their lives.******Forty-eight percent said they now set a monthly budget for their outgoings and the average Brit is now saving an extra 46 pound per month compared to last year.******Other previously frowned-upon practises helping Brits save cash include taking left-over food from the night before to work and shopping in charity shops.******TOP 10 CREDIT CRUNCH TRENDS (according to www.OnePoll.com)******1. Using money-off vouchers******2. Buying supermarket own-brand food******3. Making packed lunches******4. Refusing to tip waiting staff, taxis or hairdressers******5. Shopping in Lidl and Aldi******6. Selling things on eBay******7. Turning the heating down******8. Driving slowly******9. Shopping in charity shops******10. Re-using carrier bags

Rate cut round-up: “policy mistake” or “confidence boost”?

The Bank of England’s decision to cut interest rates to a record low of 1.0 percent may have been widely predicted, but this did little to hold back the avalanche of commentary that began the moment the news came through at noon today.

Interest rates, which have now been cut five months in a row, are at the lowest level in the Bank’s 315-year history, and the list of people calling yet another easing pointless appeared to be getting longer.

Economist Ros Altman, writing on www.theguardian.co.uk, said: “This is another policy mistake. More panic cuts are not the answer to our economic crisis. Policymakers are desperately trying to boost the flagging economy and encourage more spending… but lower rates are a very crude weapon. They punish those who have got money to spend while benefiting the very groups (banks in particular) whose actions caused the mess in the first place.”

She wasn’t alone. BBC blogger Stephanie Flanders wrote: “It is hurting. But so far it isn’t working… Savers say they are being punished for nothing – rate cuts are hitting their income, while having less and less impact on the economy at large. They have a point.”

Meanwhile, Melanie Bien, of mortgage brokers Savills Private Finance, was quoted in several publications as saying: “Today’s cut was expected by the markets. It will assist those on base-rate trackers with no collars or standard variable rates if those lenders pass on any of the cut. But beyond that it will have little effect.”

The Sun didn’t hold back either, calling the rate cut a “desperate attempt to revive the flagging housing market” while The Daily Mail website said the MPC was “going for broke”.

Are interest rates at one percent the answer?

The Bank of England has gone into further into uncharted territory with its decision to cut rates by half a point to just one percent. Many economists think they will be down to zero by the Spring.

But like gunfighter running out of bullets, the Bank is, in the view of some observers, just wasting ammunition by using the interest rate weapon.

The problem lies, they say, in the availability of credit, not the price of it. What use is a nice cheap loan on a house if a bank is demanding a whopping 25 percent deposit?

Do you think the Bank of England could do more to stimulate confidence and get credit flowing again — and if so, what could the central bank or the government do?

Banks rescue package: will they start lending again?

Melanie Bien, director, Savills Private Finance, is a guest commentator. The opinions expressed in this commentary are her own.

It is too early to say whether the latest bank rescue plan will have the desired effect of persuading the banks to start lending again. But it is a step in the right direction and we welcome it as a positive move as it may just remove the remaining stumbling blocks to getting the credit and mortgage markets functioning properly once more. Clearly, something further had to be done. October’s £37bn bank recapitalisation did little to persuade banks to regain their appetite for lending. Credit continues to be difficult to come by – unless you have a large deposit or equity in your home and a clean credit history.

The latest bailout aims to guarantee lending and insure banks’ bad debts, such as sub-prime lending in the US. The idea is that banks won’t need to hold back vast sums in case of default on loans – something they have been doing until now. What is particularly encouraging is that this is a comprehensive package of measures which taken together is likely to have more of an impact on increasing new lending than addressing one area at a time.

The new £100bn mortgage guarantee scheme to underwrite lending between banks and financial institutions as recommended in Sir James Crosby’s report, is perhaps the most significant development. Before the credit crunch hit, the securitisation market was a key source of funding for the mortgage market, responsible for a third of all lending. This scheme should help rejuvenate the securitisation market, which has all but closed.

There is a danger that it may prove to be too restrictive, however, as only AAA-rated securities are covered. Much also depends on how honest the banks are about their exposure to bad debt. A fee-based insurance scheme whereby the Treasury and banks will identify bad loans  or toxic debts that will ultimately be covered by the taxpayer should remove some of the blockages in the system that are preventing the flow of mortgage lending. But without an honest and open declaration of exposure by all the banks, it will be very difficult to draw a line under what has gone before and start afresh.

The extension to the £250bn credit guarantee scheme announced in October until the end of this year should also have a positive impact, allowing banks and building societies to roll over new debt, as should the new liquidity scheme to replace the Special Liquidity Scheme allowing banks to swap illiquid assets for gilts.

The change in strategy with Northern Rock is interesting. Instead of encouraging the lender to run down its business and shrink its mortgage book, the government has changed tack. The bank will now encourage existing customers to stay, presumably with more attractive reversion deals. It will also look to attract new borrowers – hopefully those purchasing, not just remortgaging, with more attractive rates.

Global problem or self-inflicted wound?

The government has unveiled a second package of measures aimed at getting the banks to start lending again and helping the economy off its knees.

The new package follows last October’s 37 billion pound bank bailout which ministers have reluctantly had to concede was not enough. It may have shored up their capital positions but it did not prompt them to start lending again. The latest plan aims to give them a hefty nudge in that direction by offering them insurance against losses and guaranteeing their debt.

“This is a global financial problem affecting us all,” Gordon Brown insists at every possible opportunity as the Tories press their austerity line and seek to blame Labour for helping to create the conditions for the credit crunch.

Do you agree? Is Brown doing the best he can in a bad position caused by factors outside the government’s control? Or should the government have been more aware of what British banks were doing? And what do you make of the latest bank package?

Easing the pain for small businesses

The government has unveiled a plan to guarantee up to 20 billion pounds of loans to help small businesses survive the credit crunch.

But there are concerns that will not be enough to get the banks lending sufficient funds to help businesses get access to cash.

The Conservatives want ministers to go further and underwrite 50 billion pounds of loans.

Some businesses are sceptical about the government’s plan. They say they have applied for these loans in the past and have found the caveats to be a deterrent.

What do you think of the plan? Are you the owner of a small business that has found the banks less than helpful? Tell us of your experiences.