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Today's Telegraph Editorial Leader: Britons Feel Poorer Because They Are Poorer

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Britons feel poorer because they are poorer

The cost of living is rising. Sadly, wages are not keeping pace. For every pound we earn, we are now compelled to spend 71p on the mundane business of surviving. Gas bills, mortgages repayments, stealth taxes, council tax, petrol and electricity costs are increasingly eating up our income - before we have any fun. Since 2002, the average household has had £82 less to spend each month. We have two choices: cut discretionary spending or borrow more.

Debt levels are already unprecedentedly high. Consumers have borrowed a total of £1,200 billion, almost equalling the annual GDP of the whole country. Many economists argue that such levels are not sustainable. Should higher energy costs feed through to inflation, thanks to manufacturers and retailers reacting to higher bills, the Bank of England may feel compelled to increase interest rates in the near future.

That would spell disaster for those already overstretched by debt, and deter everyone else from borrowing any more.

Without wages rising to keep up with increasing costs, the only alternative to debt is to resist the lure of the cashpoint. In fact, this is already happening. Consumer spending has fallen five per cent in the past 12 months. Shops are suffering. For the past few years, they have been able to cut prices by outsourcing manufacturing to China and India.

But costs are now as low as they can go. So are margins. There is no more slack for the high street to cut. If our spending falls much lower, which it looks as though it will have to, then shops will shut and unemployment will rise. As unemployment rises, spending falls further. Consumption accounts for nearly two thirds of GDP, so if the consumer catches a cold, the economy goes down with flu.

We are feeling poorer because we are poorer. The amount of money we can spend as we choose has fallen by 10 per cent in the past five years. The horizon will darken quickly should any other factors contribute to the cyclical difficulties we are facing. Any rise in commodity prices will push prices for consumer goods further out of reach. Interest-rate rises in the euro zone and America are likely to put pressure on us to follow suit.

A crash is not inevitable: it is still conceivable that the Bank of England could manage a soft landing. But, even if it does, the time has come to buckle our seatbelts.

"A crash is not inevitable" - but pretty likely!!

Edited by jp1

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Britons feel poorer because they are poorer

"A crash is not inevitable" - but pretty likely!!

it's uncanny... I can imagine the editorial meeting

"we're a bit short of ideas to attack the Reds today guv"

"get onto that housepricecrash thingy and crib something then boy, we've only an hour left!"

RichM are you an agent?

PS - I would add that I appreciate the Telegraph's sterling work and occasionally reward it with my custom. :)

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The amazing thing is, it's only taken them a decade to notice.

I agree - it's a decent article but isn't what most of it says just stating the bleedin obvious? The fact is most people are paying out too much for their MORTGAGE in the first place.....they've been sucked into the whole 'miracle' of home ownership - have overstretched themselves and now that energy prices are rising (and let's face it if anything is going to rise, it's going to be energy costs not house prices) they're squealing like pigs.

Edited by The Dude

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I agree - it's a decent article but isn't what most of it says just stating the bleedin obvious? The fact is most people are paying out too much for their MORTGAGE in the first place.....they've been sucked into the whole 'miracle' of home ownership - have overstretched themselves and now that energy prices are rising (and let's face it if anything is going to rise, it's going to be energy costs not house prices) they're squealing like pigs.

Yes -- pigs all sucked in to the World's Biggest Ever Pyramid Selling Scam..... - http://www.housepricecrash.co.uk/forum/ind...showtopic=31648

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"they're squealing like pigs"

Once they were Pigs Singing the praises of homeownership-

Now they have reverted to Pig-nature, and are squealing like the Piggies that they are

Never mind about the "c" word, how about the R word - RECESSION. Because that's where America is headed by the end of Q1 2007 :rolleyes:

Oh, and they won't be able to get out of this one like they did the last one in 2001.

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The fact is that most people are reaching this conclusion - so newspapers can no longer ignore it. I'm relatively new to the board, but have felt something was in the pipeline for the last 18 months. Most companies I deal with are living month to month never mind qtr to qtr.

Only today my father in law who is 79, while having a general chit chat about the economy said "it won't be long before the bubble bursts" (no prompting or mention from me) his advice is get what you can while you can and pay off your debts. He's seen it all b4 and being Irish and in close touch with back home he thinks they will pop very soon - which will impact big on us as well.

If retail are struggling now, whats going to happen at Christmas? Can you imagine the reports of slow sales, they were bad enough last year. WIth petrol prices, energy increases, interest rates up ? expenditure on school uniforms,etc in september familes won't be splashing out at christmas. Its our spending thats keeping the economy going.

It's not nice but like a car crash, its morbidly fascinating and I think it's a correction we need.

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A friend works for a well-known tour operator, whose management are stating that most competitors are 18% down on their profits YOY, the cause being the very reasons stated above. The holiday industry is another very telling canary in the coalmine.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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