Friday, Jul 25, 2008
Much worse could follow as the consumer crunch deepens
The Times: Fears of recession grow as Britons stop spending and sales slump
"With families already burdened by soaring costs of living, rising mortgage bills, slumping house prices and modest pay deals, Britons are set to abandon their past high-spending habits, said the National Institute for Economic and Social Research. A continuing slide in house prices until 2010 was one key factor set to take a further toll on consumer spending and confidence, it cautioned. Based on the value of homes dropping by 10 per cent, it calculated that this would reduce households’ total wealth by £357 billion"
Posted by growler @ 07:31 AM (438 views) Add Comment
6 Comments
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1. Sneaker said...
"Fears of recession grow as Britons stop spending and sales slump"
That IS a recession.
2. yorkshireman said...
"Based on the value of homes dropping by 10 per cent, it calculated that this would reduce households’ total wealth by £357 billion."
This kind of statement never ceases to amaze me, but it seems to be ingrained in common culture. You can spend money to buy or run a house, but you cannot spend the house.
3. Fjcruiser said...
for the house until you sell it is only a paper loss. people will delay if possible moving. unfortunately, fuel bills, food and other necessities have increased in reality and the main cause of a recession.for the last ten years in the uk we have been used to pay little for our food, our utilities and our fuel and establishing our wealth relative to house valuations. times have changed, we are now more in line with the rest of europe, but it hursts because of the sharp rises. it still does not mean we have to go deep into recession. in the uk, labour laws allow the workforce to be more flexible, which potentially should allow us to come out quicker from the slump. I call it readjustment rather than recession.I am an optimist at heart!
4. it_is_going_with_a_bang said...
Household wealth?
Thats just plain dumb. Wealth meaning that when people can't afford something the house will pay for it.
Quick remortgage now!
5. Tara747 said...
Fjcruiser, admirable optimism but there is no elasticity left in the average budget. People have stretched themselves so much to own houses etc and are in so much debt that there is no money left to accommodate price increases in essentials. I am constantly seeing threads on MSE where an extra £15-20 a month is actually tipping already indebted people over the edge. This is real and it's very sad. Prepare for things to get MUCH worse.
6. waitingfor hpc said...
err- the labour laws are not good any more. I employ people and NuLabor have made sure that it is VERY hard to move labour around. Have you seen the minimum wage over here compared to the USA?