UK economy outlook bleak amid Brexit, debt woes and rising inflation
Confidence in UK housing market at five-year low
UK high street sales crash at fastest rate since 2009
Number registering as insolvent in England and Wales hit a five-year high in Q3
UK public finance hole of almost 20bn in the public finances set to grow to36bn by 2021-22
Protect your savings with gold in the face of increased financial woes in UK
This week markets will be watching the UK with baited breath as the Monetary Policy Committee meets this Thursday to discuss a potential rate rise.
Expectations of a rise have increased to 80% in the last week.If the Bank of England does raise rates it will be for the first timein a decade. It is unlikely to be a dramatic increase though, probably arise of 25 basis points to reverse the emergency rate cut which followed the Brexit vote.
Should the UK decide to raise rates this will likely boost confidence somewhat in the economy. However any increase in positivityregarding the UK will be short lived once markets realise it will take more than a small rate rise to get the country out of the huge red hole it is currently digging its way into.
Brexit is being blamed for the majority of the UK’s woes at present, however this is merely a politician’s scapegoat. Confidence in the UK housing market has slipped to its lowest level in five years, family spending power has declined in five out of the last six months, the hole in public finances is likely to increase over 100% from the initial forecast by 2020, personal insolvencies are at a five year high and inflation has hit 3%.
These plus many more financial and economic problems have long been brewing. Problems with money naturally lead to social problems which end up exacerbating themselves further as individuals find continue to struggle on a daily basis.
Sadly the UK is in a real state of limbo thanks to Brexit, how the government will manage to solve the other significant issues such as rising debt levels (public and private), inflation and a slowing economy whilst managing EU negotiations is a feat yet to be witnessed.
We have been approaching a juncture for some time where we must decide as individual savers, investors, pensioners and future pensioners what the best way to prepare for the future is. Do we stand back and believe that the government has our best interests at heart or do we prepare for their failure? Their inability to support the value of the pound, protect interest rates, avoid bank bail-ins and solve the debt crisis are all situations that could see our own savings put at real risk.
Falling confidence both in and inside the UK
Despite expectations of a rate rise, sterling stumbled in October thanks to weak economic data and more negative headlines regarding Brexit.
What’s the one thing governments like to say positively about a weak currency? That it’s good for exportsbut not in the UK it’s not.
Aswe explained earlier this month, a much revered boost to UK exports following the Brexit vote was most likely down to our gold market. Now that the Chinese have calmed down on their gold shopping spree we are seeing what state the rest of the export market is really in.
The trade deficit in goods hit a record high, as the gap between what the UK bought and sold widened in August to 14.2bn. That was much bigger than expected, and up from 12.8bn in July. Imports surged by 4.2% during the month, while exports only rose by 0.7%. The overall trade deficit, including services, widened to 5.6bn in August from 4.2bn in July.
and from within things aren’t much better
Currency and export markets are not the only ones having a problem with the UK. There are nervous feelings much closer to home in people’s own homes and on the high street.
A Halifax bank survey found one in five British adults surveyedexpect house prices to fall over the next 12 months. This isthe weakest reading for consumer expectations since October 2012.
This negativity regarding the housing market is thanks to concerns over the economy, weak wage growth and concerns over rising inflation. For years the UK government has rallied around the UK housing market, convincing citizens that owning a home was a right of passage. It seems the jig is up.
Most new buyers are losing faith in the housing market as not only is the cost of borrowing set to raise but raising the funds for a deposit is near impossible. In the three months to August there was negative wage growth, bringing the total number of months of negative growth to six for 2017, alone.
In all regions of the UKincomes have failed to rise by more than the current inflation rate of 3%. This is not only placing pressure on the housing market but also on consumer spending.
A ‘steep drop’ in retail sales was reported in the CBI survey this month, alongsideorders placed with suppliers dropping at theirfastest rate since the spring of 2009.
But people still need to eat, clothe themselves, keep a roof over their families’ heads and this is where the government has gone so badly wrong. By fuelling an era of cheap credit, stealthflation, zero-hour contracts and low wage growth families and individuals no longer know how to survive on their wage packets.
The annual rate of growth of consumer credit climbed is currently at 9.9%, having been as high as 10% in the summer.
According to Bank of England data, another 641m was put onto plastic in the month of September, the sharpest increase in debt since May 2016.The total credit card debt stock reached 69.4bn, the highest on record.
Unsurprisingly, this isn’t sustainable.The number of people registering as insolvent in England and Wales hit a five-year high in the third quarter
The number of those registering as insolvent is only set to get worse should interest rates rise.A hike wouldpush up the cost of both secured and unsecuredborrowing.
AsGillian Guy, the chief executive of Citizens Advice, told the Independent:
The rise and rise of consumer debt is a cause for alarm at a time when large numbers of people are already in financial difficulty.
Broken government = broken economy
Of course, very little of the ‘on the ground’ problems such as wage growth and consumer debt levels are making the headlines.
The headlines are the same as they have been for the last 18 months or so: BREXIT DISASTER.
Is it a disaster? Who knows, but what we do know is that it is costing a huge amount of money with even more expected to be paid out in the coming years. This is all money that the UK simply does not have.
It was only a fortnight ago that we found out Britain’s stock of wealth had fallen from a surplus of of 469 billion to a net deficit of 22 billion. This is down to amassive writ