Monday, Mar 16, 2009
It was on the cards.
The Independent: £40,000 each: The personal cost of the downturn
The worst economic slowdown in three-quarters of a century has wiped £40,000 from the wealth of every adult in the United Kingdom, a national total of almost £2 trillion; that is £2,000bn, or £2,000,000,000,000. The research into the destructive effects of the recession by the accountant PricewaterhouseCoopers for The Independent shows that the fall in the value of property and shares owned by British households between July 2007 and February 2009 has reached the equivalent of 18 months-worth of national output – a colossal destruction that will take many years to recover from and threatens the retirement plans of millions of Britons.
Posted by charlie brooker @ 12:13 AM (1026 views) Add Comment
14 Comments
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1. paul said...
Good job I don't own any property or shares.
2. phdinbubbles said...
"Thus, each adult Briton has lost on average £17,000 from the property slump"
They fail to mention the millions of first-time buyers over the course of the next decade who will be at least £17,000 better off.
3. str 2007 said...
Paul
That's what I thought, bet you have some sterling though - down 30% !
4. timmy t said...
It also fails to mention that a good proportion of these people had their "wealth" created by the boom that preceded the crash. The only people who will lose out are those that MEW'd or overstretched themseves by buying houses beyond their means. The sensible ones will end up back where they would have been if GB had stuck to his words "no more boom and bust"
5. bluebeach said...
This Sterling thing, now I know it's down 30% against the Euro, but as I am paid in £s and buy provisions and perhaps property in £s, then I have difficulty in understanding the effect. If I was to buy an overseas property, then I would be affected, but in the UK, it's harder to figure out.
6. inbreda said...
bluebeach - how many of your provisions are made in the uk? Not many I would imagine. Even turnips will be grown in hungary or some such. All the electrical goods are going to be made in china or japan. The imported inflation is avoided for a short time - but modern retailing keeps low stock levels, so if the pound doesn't strengthen soon, there will be a sudden bang of inflation. Go through everything you own/buy, and work out the effects of everything not made in the UK costing 30% more.
7. 51ck-6-51x said...
bluebeach - If one is planning on living in the UK for the foreseeable future then the effect is on imports and exports only - for UK citizens that means energy and food will generally go up in price (since we are net importers of both), at least relatively (e.g. in a global deflationary environment they may go down slower, relative to other countries) and any of our exports become relatively cheaper in their overseas market (or rather our exporters achieve greater pricing power).
8. 51ck-6-51x said...
inbreda said "Even turnips will be grown in Hungary or some such." -
But competition will prevail -- I'll grow turnips if it'll make me a living.
9. crunchy said...
2. phdinbubbles said...They fail to mention the millions of first-time buyers over the course of the next decade who will be at least £17,000 better off.
crunchy- It's a shame, we could have all been £x better off and happier (that includes banks perhaps) if house prices rose at the rate of wage inflation.
We never learn! The toxic cookie jar lid keeps being greased.
10. Dave@gift Wrapped Mortgages said...
Like most things in life, if a trend is running we all run with it. Prices went up and people were prepared to pay, you know why because there was comfort in the fact everyone else was. From my point of view it was and is affordability but the rises have been shocking.
11. mark wadsworth said...
What Paul says. And I had a quarter of my money in JPY and then AUD until late last year when GBP bottomed out again.
However, I am being cheated out of tens of thousands in interest every year (to subsidise mortgage borrowers), I'm not sure how I'll claw that back.
12. inbreda said...
MW@10
riot.
13. japanese uncle said...
Then how much 'average household' in UK gained with no reason, during the past five lunatic years?
14. mark wadsworth said...
@ JU, in round terms, pretty much nothing. House prices went up and then down again to where they were, plus a lot of households have much higher debts than five years ago.