UK News

Insights from the UK and beyond

from The Great Debate UK:

Britain faces recession without housing ATM

James Saft is a Reuters columnist. The opinions expressed are his own.

james-saft1Even in the good times, many British consumers were borrowing against their houses just to fund routine consumption, indicating a big hit to come for retail sales and for the banks who hold the loans.

With house prices falling rapidly and mortgage debt tougher to get, it is no surprise that homeowners are less able and inclined to borrow against their houses in order to spend.

That will be hitting the High Street now - analysts are expecting a 0.6 percent fall on the month in retail sales for November when data are released later this week. But a rise in unemployment next year could expose a really serious weakness in household finances, as consumers who counted on being able to extract wealth from their houses to smooth consumption in bad times find that, when bad times come, the wealth isn't there and the banks don't want to lend anyway.

Researchers at Durham University looking at survey data found that 37 percent of homeowners borrowed against their house between 2002 and 2005, typically realising about 6,000 pounds. That's a lot people borrowing a lot of money against very illiquid and now hard to realise assets.

from The Great Debate UK:

Put your questions to David Cameron

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(UPDATED Dec 18 - This post is now closed for questions)

Conservative Party leader David Cameron will be speaking on the economy and the credit crunch at Thomson Reuters' Canary Wharf office on Monday, followed by a question and answer session.

The Tory leader has argued that two main problems face Britain at present – a recession coupled with a record level of government debt, and that the government is trying to tackle one while ignoring the other.

from Global Investing:

To spend, or not to spend?

A day after Britain unveiled a multi-billion-pound fiscal stimulus package to spend its way out of recession, market analysts have been busy figuring out what it all means, in the context of a sharply slowing economy.

Nick Parsons, head of market strategy at nabCapital, has come to this conclusion:

Boosting the economy: lower taxes, higher spending or both?

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Prime Minister Gordon Brown has suggested he will push expansionary fiscal policies to help boost the economy. Brown’s comments were the latest in a series from him and Chancellor Alistair Darling stressing the importance of boosting the economy, which shrank in the third quarter of 2008 for the first time in 16 years and is expected to contract more sharply next year.

Bank of England Governor Mervyn King has also put his weight behind “some fiscal stimulus”, just as the Bank predicted in its quarterly inflation report that the economy would shrink sharply next year.

“Dragons’ Den” star Bannatyne says it’s hard to raise funds

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Duncan Bannatyne, the straight-talking Scottish entrepreneur and star of TV’s “Dragons’ Den” has been talking about how his business has been affected by the credit crunch.

“My businesses are up from last year, so we’re doing well and most small businesses I speak to are still actually doing quite well,” he told Digital Spy in an interview ahead of the launch of his new BBC2 show “Beat the Bank” on Thursday.

Negative equity nightmare returns as house prices drop

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It’s every houseowner’s worst nightmare – and it’s official now: more than a million households could fall into negative equity if the housing slump continues, the Bank of England said today.

Growing numbers of home owners could be forced to sell their properties at a loss, as the property downturn gathers pace and vendors run out of options.

Is it enough to say sorry?

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lehman.jpgSorry seems to be the hardest word in many walks of life – but for hard-nosed bosses  of financial institutions it seems to be even tougher, even during the credit crunch.

A recent notable exception was Richard Fuld, CEO of collapsed Lehman Brothers, who told U.S. lawmakers earlier this month he took full responsibility for his actions and felt “horrible about what has happened to the company,” but insisted he shared the blame with regulators and Congress.

Moneyspeak: Of donkeys and carrots and shock and awe

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sadtrader.jpgHere are just a few of the memorable quotes to emerge from the credit crisis:

If you would like to contribute please send us your own selection in the comments box below, with a link to where you found the quotes.

PRAISE FROM THIS YEAR’S NOBEL ECONOMIC PRIZE WINNER

“The British government went straight to the heart of the problem and moved to address it with stunning speed. Has Gordon Brown saved the world financial system?” – Paul Krugman.

You know things are bad when..

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    You know exactly what the population of Iceland is and can also pronounce the name of its prime minister. Even the word ‘crisis’ seems to have lost its currency. Countries pop up for sale on eBay for 99p and get few offers. Posters on BBC messageboards stop discussing the undulating pitch of Robert Peston’s voice and listen to what he’s actually saying. The speech bubble on Page 3 of the Sun is given over to discussing the credit crisis. Financial market updates displace stories about Jade Goody on the tabloid front pages. Bad news stories from government departments are rushed out day after day and not even the Opposition seems to notice. Estate agents finally admit house prices have fallen but tell you now is a really great time to buy because the market is stabilising. People marketing get-rich-quick property seminars don’t get taken seriously any more. The Chancellor, writing in the Financial Times, says that “now, more than ever, we need new ideas”. Your primary school-aged children know that credit crunch is not a type of biscuit and that IMF isn’t just a fictional organisation in Mission Impossible. You go for a while without noticing one estate agent’s mini and then you see a whole bunch of them on the back of a car transporter. A pensioner on the evening tube train from Canary Wharf gives up her seat to a banker because she reckons he might need it. The Ivy rings to ask if you’d like a table tonight or any night. There are no spare trolleys when you turn up at Aldi to do your weekly shop.

Do you have any better suggestions? All contributions welcome – please send in your selection.

Industry awards, the kiss of death

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So, how to tell in advance which banks and financial institutions were headed towards the door marked ‘exit’?

City analysts like to pore over spreadsheets, corporate accounts and chief executive comments for nuances and clues as to performance.

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