During the first weeks of 2011 economic reports have all been gloomy headlines concerning England’s economy and with the current government’s economic blinkers firmly in position, it’s highly likely that we’ll see a lot more house repossessions in the coming months as we dive into the pit of a second recession. Recent comments point to a abject failure of the Con/Dem economic “strategy”. Mervyn King, governor of the Bank of England is reported as saying that, “One has to go back to the 1920s to find a time when real wages fell over a period of six years”. The repercussions of this upsurge in the cost of living is yet to be seen, but it’s unlikely to be satisfactory.
Chancellor George Osborne’s response has been, “There is no question of changing a fiscal plan that has established international credibility on the back of one very cold month. That would plunge Britain back into a financial crisis. We will not be blown off course by bad weather.”.
We are starting to see the results of the coalition gov’t’s drive to reduce the UK’s deficit and they look very far from satisfactory. Evidence for this belief arises from information over in the last few weeks from the UK Statistics Office which inform us of a 0.5% rise in inflation to just over 3.5% and a 0.5 % contraction in GDP. Couple these facts with the sales tax hike, job losses in the public and private sectors and an almost certain interest rate hike in the near future, the corollary will be more home owners finding it hard to manage financially.
Angela Eagle, the shadow Chief Secretary to the Treasury, said: “It’s time for George Osborne to get his head out of the sand, look at the facts and rethink his reckless plan to take another £20bn out of the economy in April on top of the VAT rise. He needs a plan B and he needs one quick.”
Without doubt, the most destructive result of the government’s recent actions will be an increase in the number of bank repossessions. While some sectors such as industry are showing a little growth, many, including construction, are contracting and as we move into the first financial quarter in April and the results of public sector job losses begin to be felt there is little to stave off the impending house repossession crisis.
“Given that margin of spare capacity, there is a case for promoting the recovery by postponing at least some of the austerity program,” the National Institute for Economic and Social Research said in its latest economic review. “The cost of delay would be acceptable because borrowing costs are currently low.”
Recent research from homelessness charity Shelter, had more shocking news for us. One question in the research asked home owners how often they had used their credit card to pay their mortgage over the last 12 months and the astonishing figure was over 2,000,000 times, which can only mean more bank repossessions in the coming year.
Campbell Robb, chief executive of Shelter, said: ” It’s shocking to see how many people simply don’t have enough money to make ends meet and shows just how hard people are finding it in this tough economic climate.
“Recent research from Shelter showed that over two million people are now turning to their credit cards to pay their rent or mortgage, showing the desperate measures people are being forced to take because their incomes cannot keep up with the increasing cost of living”.
The previous government’s policy to keep interest rates low over the last few years have undoubtedly contributed to keeping bank repossessions relatively stable for a country in recession, but as interest rates increase to combat rising inflation and many workers find themselves out of employment, the number of bank repossessions can only intensify.