British Women Choosing Debt Consolidation Loans More Than Men

Recent figures from the Government of the United Kingdom’s help line for insolvency have shown that there are a significantly larger percentage of women in the UK than men who are choosing loans for debt consolidation as a means of straightening out their finances. Financial experts suggest that often an IVA could have been a better solution for these women, but a lack of information is pushing them towards other solutions that could keep their cycle of debt going – not a good sign with such heavy cuts coming from the UK government that could send many spiraling down further into debt if they do not find a way to fix financial problems.

The figures themselves showed that 22 per cent more women in the UK are now facing a serious financial problem that they hope such loans will cure, compared to 8 per cent more British men. Some have pointed out that the issue could be a case where women tend to be in charge of managing household finances in the UK and therefore may be the half of a married couple most likely to call in and seek help from the Government’s help line.

However, some have stated that there is a preponderance of choosing luxury or simply more expensive goods among women that is a tendency which can be shared by men, but is often not. Of the more than 64,000 women tallied in those figures, it appears that many had been consistently spending more than their incomes could bear for quite some time. This desire to keep up a seemingly extravagant lifestyle shown in TV programmes and movies appears to be hitting women in the UK hardest if they are between the ages of 25 and 49 years old. In that demographic, more than 45,000 ended up as part of the 64,000 women calling in for help. While not blaming such businesses flat out, experts said that retailers constant bombardment of women in this age group to encourage spending has revved up during the economic crisis Britain has undergone recently and that such advertising could be having a mild subconscious effect on consumer buying habits. However, the solution they pointed to was simply better fiscal education for consumers.

Often, these women have reported actually borrowing money to purchase more disposable goods instead of to fund investments to get themselves ahead. Financial responsibility advocates suggest that had they leveraged their borrowing power to be able to improve their situation rather than ‘treat the symptoms’ of financial pain, they could well have ended their own debt problems. Now, instead, they face bankruptcy and still are not aware that an Individual Voluntary Arrangement could be entered into as a solid path to financial recovery.

Huge Changes in Government Spending on the Way in Britain

It has only been a short time since the latest plans for cuts in Government spending were released, but already the public in the United Kingdom is reeling from the news of how sweeping the changes brought about by Chancellor George Osborne are set to be. With changes affecting everything from the retirement age to the criminal justice system in the UK, nearly everyone is paying attention to the solution for the UK’s massive public burden of debt now. According to media reports, even former Prime Minister Margaret Thatcher is tracking the situation from her hospital bed.

Osborne himself has now come forward to say that there will not be an alternative plan to the one that he has chosen to put into action. In an effort to reduce the massive scale of the national deficit which is consuming a full 12 per cent of the UK’s Gross Domestic Product, Osborne unveiled a programme which he says display “hard but fair choices”. The spending review has been made major news in the UK media and along with it, all sorts of criticism as those who oppose the Conservative plan voice their opposition. Of course, experts say that this was to be expected no matter what plan might be put forward since the UK is still stinging from the recent economic troubles and nervous about what the future might hold. For his part, Osborne continues to stand firm and refuses to back down from his position that the UK must make difficult choices if it wants its economy to recover.

A 2 year review of the programme is what the Institute for Fiscal Services is lobbying for Osborne to consider, saying that the cuts may affect public services so severely that the plan may need to be adjusted. More than £81 billion is set to be cut from government spending and the areas which will see cuts include local government, social housing, welfare, police forces and higher education – a fact that is alarming to many, but absolutely essential according to Osborne who has stated that the UK today is clearly at an extremely strong risk for bankruptcy.

In all, the new spending cuts will axe a total of £18 billion from welfare because they cut an additional £7 billion from the budget that had already been reduced by £11 billion in the previous budget. To put this into realistic terms, one group of UK citizens whom this particular cut will directly affect are those 1 million individuals who now receive £50 per week in incapacity benefits that they have been receiving for a year or more. Additionally, the cuts to housing benefit rules have certain charities predicting increased levels of UK homelessness in the younger demographic. To some, especially those in Labour, the cuts are simply too harsh and treat the poor with unfairly intense effects which will not reach the rich. However, some commentators have been quick to point out that even the royal family itself will be receiving a reduction in their typical subsidies as a result of the new plan.

Both the International Monetary Fund and large corporations support the changes Osborne is introducing and he is using this support as way to bolster himself from the withering criticism the plan is drawing his way, especially from Labour. Osborne’s plan will take 4 years to play out and in the mean time, his supporters say that the increased focus on fiscal credibility will put the UK in good stead with the rest of the world by making sure that the national deficit does not destroy the economy and end up triggering far more draconian changes than the cuts to public spending appear to have at first viewing.

A private sector recovery led by big business is what Osborne is banking on to bring the UK back into good financial fitness. He went on to say that while he did consciously cut things like housing benefit for the UK’s single young people, he did not cut into the nation’s health care service, the roads system, schools nor green energy initiatives. The Chancellor pointed out that with spending on housing benefits to such a level that it currently exceeds the amount spent on the police force in the UK, he saw a problem and wanted to take direct action to correct it before it got further out of hand.

This story will obviously have many more details coming to light as both sides speak out about the new plan. Economists say the changes will definitely be felt by the majority of the UK in one way or another.

UK Retail Seems to Indicate Coming Double Dip Recession

The retail industry in the United Kingdom today is not looking good according to recent reports that have just compiled the data for the month of August 2010. Since research takes some time to be compiled and organized, it often comes out later than what many expect and this month many also did not expect to see sales fall by nearly half a percent, raising the level of worry that a double dip recession may indeed by in progress. Official figures from the Office for National Statistics have shown that spending on high street fell for the first time since since the beginning of 2010, not a good sign since consumers are already growing anxious over austerity measures that will slash deep into public spending.

The dip in buying activity at the consumer level has given yet another bit of evidence which suggests the economy is further cooling since the middle of the year and that means that the “mini peak” enjoyed by the economy during the 2nd quarter of 2010 may already be at an end. That was the first signal of a potential spike after 6 straight quarters of decline that began back in the Spring of 2008 and lasted until Fall of 2009. This mini recovery was looking good and showed unemployment falling, stronger sales at retail, greater economic activity over all and even a rise in manufacturing in the UK. That brief burst in early 2010 was, in fact, the fastest jump in economic activity since 2001, but now it appears as if things have come to a screeching halt.

Some are blaming Government figures such as George Osbourne for the changes, but analysts remain skeptical over this. The Chartered Institute for Purchasing and Supply gave a brief picture of what was happening in the manufacturing, construction and services sectors and in September these were already looking to be set to slow. Industrial trends were looking quite similar and output from factories in the UK may be increasingly, but only mildly so. None of this paints a good picture for consumers already loaded with debt and hoping for job opportunities as a way to pull themselves free of their burdens.

The housing market, too, has begun a serious decline and first time buyers are scarce overall. Home buying is already at half the level it was before the economic crisis that began to be noticed in 2008, but prices are falling which could be a good sign for the UK public at large – if they were able to find jobs and if other items in their daily lives were not so expensive. Since the Government has ended the ‘cash for clunkers’ programme, sales of new cars are also plummeting as consumers decide to opt for used vehicles instead of springing for financing deals which could end up punishing them with greater debt over time.

In London, retail sales have been abysmal say economists, and the August figures are deeply troubling. Since retail is a prime indicator of consumer confidence, the fact that it is already beginning to slide does not bode well for the UK economy and is likely a reflection of fewer jobs, greater debt and a variety of other factors that are proving difficult for average citizens to handle.

UK Small Businesses Struggle to Get Loans

The press in the United Kingdom is now reporting that a flagship support scheme intended to support lending for small businesses saw a 60 percent decrease in lending over the last year. The figures come from the business department and regard the Enterprise Finance Guarantee scheme that was lending at a level of just over £250 million during the 1st Quarter of 2009, but in the 1st Quarter of 2010 that level was at less than £190 million. Even after this, levels dropped for 3 consecutive months to under £150 million. This has small business economic observers worried about the ability of these entities to survive in the present economy.

The purpose of this scheme, often known by the abbreviation EFG, is to give state backing for loans from banks that are designed to be used by small businesses. Part of the drop in lending is indeed natural, say observers, as businesses have chosen to pay off their debts rather than taking out new loans, but some financial experts say that a wide number of business owners hurried with their applications and did not properly present a sound case to banks as to why they should be eligible for EFG scheme loans.

According to some in the accounting field who are familiar with small business situations, a great deal of these businesses did not realize that the EFG was not actually designed to help them get emergency cash to stay afloat. Instead, the loans were intended to go to businesses that had taken the time and money to put together a solid business plan to present to lenders – otherwise, say experts, this finance would never be allowed for a hasty, scarcely detailed business plan.

This cumbersome application was somewhat overwhelming for many businesses which were low on the excess time needed to complete the paper work not to mention the extra funds required to execute the type of detailed statistics the lenders wanted for EFT backed loans. As far as the banks themselves go, they say that they are lending to more small companies and lending more money, as well, but that the demand has simply fallen off over the course of the last year.

The EFT backing scheme is designed to support loans between £1,000 and £1 million for companies that have a smaller yearly cash flow than £25 million. To date, over £1 billion such leans have been backed by the Government since the EFT was first put together and another £200 million has been added since the June Budget which was put together as part of an emergency plan to help the UK economy.

Economists are glad for these figures which were brought to light due to the efforts of a new UK bank called Aldermore which put in a freedom of information request to learn the statistics. The issues for most economic observers are that small companies often provide steady employment for an ever growing number of Britons and that when these companies cannot grow, the job market can shrink then affecting much of the economy.

Bank of England Looking to Cap Mortgage Lending

Recently, the Bank of England announced that it intends to put a cap on mortgage lending as a strategy to try to stave off a second credit crunch from occurring. According to reports, the Bank wants to cut back risky lending by having those looking to buy put down a deposit ranging between 10 and 25 percent of the total loan’s value in order to be eligible.

The Deputy Governor for the Bank, Charlie Bean, said that there will need to proper restrictions in place so that the size of the lending part of the economic stabilization package does not get out of hand. Other aspects of this package, which Bean announced during a meeting of central bankers which took place in the United States, include ensuring that capital is available to keep banks afloat and interest rates are set to workable levels.

What has alarmed some is that this is the first time in recent memory that a high ranking Government official has let word slip that the Bank may get directly involved in the setting of loan to value rations in the mortgage lending market. Nothing similar to this has been seen since the 80’s when the now discarded credit controls were introduced. During this time it was very tough for those who wanted a mortgage to be able to get one.

The new regulations administered by the Bank of England for the banking industry could start as soon as this fall and would be introduced by Chancellor George Osborne. While mortgage industry professionals feel this would be terrible news, it does prove that consumers facing credit problems due to unusually high debt will most likely want to enter a debt management plan as quickly as possible. The credit rating system is now getting harsher than ever according to this news and it could be extremely tough for those who have high debt to work their way out if they do not seek a solution while one is available.

More Stimulus Needed to Sustain Economy Says Bank of England Deputy Governor

Charles Bean, the Deputy Governor for the Bank of England has told the press that he believes more financial stimulus is going to be needed in order to help a shaky recovery continue in the United Kingdom. The recent recession’s devastation is not likely to be rebounded from unless the Government is willing to do something serious, Bean has said. He called the current economic state of the UK ‘fragile’ and said that the process of recovery is incomplete now with far more fine tuning needed.

At the time, Bean was speaking to a group in the United States at an annual symposium of the Kansas City Federal Reserve located in Jackson Hole, Wyoming. Policy action, he noted, would be needed to steer the recovery in the proper way. While his US audience took in his message, still reeling from their own version of the UK’s economic crisis, Bean pointed out that even the speeding up of the economic recovery in the UK during the 2nd quarter of 2010 is being overshadowed by a squeeze in the Government’s budget. The US is facing a cooling economy which won’t help Britain, but particularly rough is the fact that the region of the world now on the euro is facing their own severe debt crisis – particularly troublesome since this is the UK’s largest trading partner.

The economic growth that UK citizens enjoyed during the past boom times would have had to have been regulated more tightly, according to Federal Reserve Chairman Ben Bernanke, in order to dodge the most recent credit crisis. However, this would have meant a slower building of savings for many in the UK. Experts say that UK monetary policy ends up having sharp effects on the public, particularly those in wage jobs at lower levels of the income spectrum. For this reason, many today who had thought the debts they accumulated during the boom would have time to be paid off, now must seek out an IVA if they want the chance to recover without spending decades paying down nearly insurmountable debt loads.

Bean did go on to say that he believed central banks such as the Bank of England and the Federal Reserve needed to be very cautious regarding targets for inflation so that interest rates would not end up having such profound effects on the prices of average consumer goods used by men and women across the UK and the US.

In all, the recession continues to lurk in the background, says the Office for Budget Responsibility, as the UK continues cutting public spending to levels not seen since the second World War. However, the gross domestic product for the 2nd quarter of 2010 has expanded a little more than 1 percent which is the largest spate of growth since 2001 and exceeds expectations despite the fact that the service industries are not growing as quickly as had been hoped.

All in all, this could be an excellent time for consumers to consider an IVA, say financial advisors, since either a recession or a boom could end up far better for those who are already in a solid plan for their own financial recovery.

Third of British Public Using Savings for Every Day Expenses

Troubling news has recently come to light in the British media from an investment group known as Schroders which monitors the economy in the United Kingdom in an effort to determine the effects of the recent global credit crunch. The latest research from the group shows that one third of UK citizens have avoided falling into debt at a very sharp cost: they are dipping into their long term savings and other investments as a means of making ends meet on the day to day basis.

According to the group’s statistics, this segment of the UK population has already spent well over £4,500 in the past year alone as a means of trying to dodge debt. All together, the demographic has spent more than £60 billion of their stored financial resources desperately attempting to avoid debt as the cost of living continues to rise, aided by taxation many critics blame for troubled British household finances today.

In order to obtain the results of the research, a survey over 2,000 adults in the UK was undertaken. Both men and women were surveyed and the findings indicated that nearly 35% of women proved willing to dip into their savings as a means of avoiding debt while mean did so less than 30% of the time. The real issue, of course, says Schroders’ Managing Director Robin Stoakley, is that those individuals who are getting close to the age of retirement have far less of a chance to rebuild the savings they have and this puts them at a severe risk for the future if times do not shift in their favour.

Many experts have sounded off to the media that this segment of the population is dealing with the same problems that those who seek debt management plans are dealing with. The difference, however, is that those already in a debt management plan have professional advisors on their side to help them restructure their spending to cope with today’s changing UK economy. It remains hard to say which group will fare better, but analysts suggest that those who refuse to adapt their spending patterns to meet with today’s economic realities could be in for trouble.

Public Debt Expected to Reach 90% of GDP in Britain by 2013

Things are looking quite grim on a grand scale according to new information coming out from Moody’s, the world famous credit rating agency that researches and analyzes international businesses and governments around the globe. Moody’s, based in the United States and partly owned by one of the world’s richest men Warren Buffet’s company Berkshire Hathaway, is considered to be a vital source of credit ratings for not only multinational corporate conglomerates, but sovereign nations, as well. According to word from Moody’s, not only are Western nations like the United States and the United Kingdom facing a serious debt crisis, but in the UK public debt is actually now expected to reach 90 per cent of the GDP (Gross Domestic Product) in only another 36 months.

This particular situation had not been expected to materialise for another one and a half to two decades, but now time is running out, according to Moody’s own publication, the Sovereign Monitor. The US will be quick to join the UK, says Moody’s, if it manages to fail in its efforts to rejuvenate its economy and interest payments will hit 14 per cent of income derived from taxation. The past three years has already seen the ratio of debt to revenue rise to 430 percent, nearly double what it was before the beginning of that period.

Moody’s also says that Spain, Germany, France, the US and the UK are all in dire danger of experiencing what it refers to as ‘interest rate shock’ to to sky high deficits or the need to roll over short term debt in small chunks. Moody’s has now announced that any nation which fails to show that it has the level of ’social cohesion’ to get its debt back to solid ground will lose the highly regarded AAA credit rating that Moody’s is responsible for bestowing on nations that its analysts approve. Part of the issue, according to the credit ratings agency, is conflicts between older and younger generations that are resulting in situations where pensions and similar forms of income for the elderly are causing disputes at a high level of society.

The agency went on to say that the debt crisis in Europe of the past few years has changed the world and that no nation is simply automatically worthy of credit. Now, says Moody’s, the governments of the world must prove that they deserve to be lent money. In the UK, the traditional safety net has been the fact that debts for the Government would be of a long term nature and thus allow time for carefully planned repayment, but the deficit is growing that debt at faster and faster levels. This means Moody’s is likely targeting the UK with intent to knock it down from its traditional AAA credit rating position.

Public debt in the UK being expected to hit 90 per cent of the GDP in 3 years, says Moody’s, means that if Britain’s Government does not exercise steel resolve to tighten its spending by any means necessary, a sharp rise in funding costs and the expected slow growth of its economy will cause a debt spiral to materialize and down will go the country’s ability to repay what it owes outside lenders.

According to some researchers, today’s financial crisis in the UK is different from what happened in Britain following the massive spending to rebuild after funding Allied efforts in World War II because the economies then were able to grow past their burden of debt. Instead, analysts state that people living longer and reproducing more slowly is leading to high costs from the older portion of the population and rising costs of health care for that demographic. Polices in the UK, economic advisers have been quoted as saying, must change in order to avoid future troubles.

Pimco Reverses Criticism to Urge British Economic Recovery

In a move that comes as a surprise to many in the United Kingdom today, the 2nd largest bond house in the world has changed its stance towards the Government and how it is handling the national debt. Pimco has stepped forward to issue a far less harsh tone and is encouraging the clients it serves to consider taking a chance on the recovery of the nation.

In the recent past, Pimco has been quite vocal in advising against UK gilts and has said publicly that the company does not believe they would be anything close to a good idea in terms of an investment option for its clients. However, recent news has shown that now the tune is definitely changing and there are a number of reasons that investors should consider purchasing gilts because Pimco no longer believes that the UK will fail to meet its obligations. More savvy investors were advised to get in on the credit default swap market as a way to earn a great deal of money for their efforts.

These comments came from the executive vice president of Pimco, Mike Amey and are definitely a great deal different than what was heard in the past from Bill Gross, the managing director of the company. He claimed that the gilts were themselves “resting on a bed of nitroglycerin” due to the fact that the UK’s debt level was so high. Even as late as April 2010, Gross could be heard sticking to his guns and saying that the UK was part of his list of countries that should absolutely be avoided by investors, including the nation of Greece, much ballyhooed around the world for their debt predicament.

The position that Pimco had taken caused a great deal of public shame for Labour since Andrew balls is the head of the Europe based bond house and is the brother of Ed Balls, a candidate for leadership in the Labour party. Amey, however has come out in favour of the coalition Government and stated that he believes it has shown its intent to take the deficit by the horns and face down the challenge – something he believes is good news. This means, he went on to say, that the a double dip recession does not look to be such a high risk as it appeared that it might be only a short while ago.

Still, Amey remained realistic about gilts and said that he would only go so far due to the risk that the pound sterling now faces, along with inflation. Long term UK bonds, he said, do not appear to him to be of great value. Instead, the CDSs were where Pimco decided to point, showing investors that the market priced the risk of a sovereign debt default by the British Governement too high, in their opinion, and that these would make a far better investment choice when it comes to the UK.

It also goes to show that even Pimco has to admit that they can be wrong from time to time, something that has shown they continue to hold a realistic view even when that view does not particularly set them in a good light. They added that the sovereign debt risk for the UK is an ongoing issue since the levels of debt are staying quite high, but that growth should return in the future, though it will be a great deal less potent than it has been in the past.

Each Person in UK Over £60,000 In National Debt

In a stunning new report that has now been released by the Office for National Statistics, the national debt in the United Kingdom has been broken down into the cost per individual in the nation today. It turns out that at the current rate, with £4 trillion owed, each person in the country is carrying £65,000 each in state level debt. That means every single man, woman and even child in this country is bearing that much per person and this is actually double what independent analysts, who are generally more harsh with their figures, have estimated in the past. Put this way, people are a bit shocked to discover that despite whatever they earn and whatever level of debt they are personally dealing with, it is £65,000 at the state level that they are trying to pay down every time they pay their taxes.

At this level of debt, the average family in the UK would need to work for a full 5 years to pay off their selection of the national debt – not a pleasant thought for families with steep credit card or overdraft to pay already. Margaret Thatcher was famous for advising that the Government treat its own finances the way a real British household would and this study confirms her suspicions about the severity of debt in the nation today. With more people being forced into bankruptcy it turns out that the former Prime Minister just may have been on to something.

Some blame Labour and the Private Finance Initiative system for increasing the debt and the bailing of the banks during the massive global melt down that reached Britain. For others, it is the tax funded public sector pension and state pension schemes that they believe are making the trouble. Since the total value of the Government’s assets now is just under £1.4 trillion for every single office, council house, air craft, ship, vehicle, railway, school and hospital – plus all the land the state owns. That is not a very inspiring thing to see but it is the fiscal truth of the matter and signals that Britain may be in some rather grave danger if the course is not altered very quickly.

The rest of that £4 trillion in debt? It comes from the £2.5 trillion put into taking over the Lloyds Banking Group and the Royal Bank of Scotland and other expenses in the public sector. The Treasury is being accused of playing shell games to try and hide the amount of debt the UK is currently facing, but there can be no truth until the official review in October when a more accurate assessment of the financial state of the UK can be done.