I really know nothing about economy and politics and am too busy at the moment to learn so in simple terms… what caused this uk recession and what exactly is a recession?? A rise in living costs??
Will things be better when I want to buy a house in about 2 years??
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#1 by Warren T at April 28th, 2009
IT STARTED WITH THE HOUSING CRISIS IN THE UNITED STATES
TOO MANY PEOPLE BUYING HOUSES THEY COULD NOT AFFORD.
#2 by Lucinda L at April 29th, 2009
A recession is officially when there is a reduction in growth (the amount of profit a country makes) for two economic seasons in a row. A season is just any block of three months. In real terms then yes it involves prices going up, interest going down and businesses closing down because they aren’t making enough profit.
It started when food and oil prices rose due to problems abroad. People in the UK weren’t able to cope with the increase in prices because there is so much debt in the country with large numbers of people having credit card, loans and/or mortgages which they could not pay back with the cost of living increasing, putting banks into financial trouble. It is normal for all economies to grow and then fall regularly, though, and many economists were expecting a recession around now. What is important is that the government try to keep the economy running to prevent further recession which would cause the situation to last much longer.
It is expected to last until 2010 so it’s possible it will be better in 2 years but even if it isn’t, it will not cause a great problem to you because house prices are coming down in the recession, meaning that it should be easier for you to buy a house. The only difference is that it is possible building societies will require a larger deposit to be put down. Many have increased the normal 10% deposit to up to 30% but they are being strongly encouraged to reduce this to keep the housing market going.
#3 by domme me at May 1st, 2009
the banks lent to bad debtors… people who couldn’t pay back.
so now the banks are not lending out money so easily… companies cant get legitimate credit… they lay people off…. people are worried about money, they spend less on luxuries and new stuff….. people who sell luxuries and new stuff cant pay back their existing loans and they lay people off… etc, etc
its all a heady mix
IF YOU ARE SURE ABOUT YOUR INCOME - ie, if you are a civil servant and are totally sure you wont be made redundant - now is a good time to buy a house… people want to sell, and they are willing to take lower offers than they would a year ago.
#4 by Lucifer at May 3rd, 2009
britain bought billions in toxic mortgaged backed securities
#5 by Corky at May 6th, 2009
A recession is basically about being mega-skint.
Stuff me!
Is ‘Warren T’ one of Greaseball Browns’ nom-de-plumes?
‘It all started in America’ - really? - wake up buddies the bloke responsible for most of our troubles is the strange fellow with the even stranger grin, who just happens to live in Downing St.
#6 by robert c at May 9th, 2009
Gordon Brown’s incompetent handling of the British economy!
#7 by one shot at May 10th, 2009
This all started about ten years ago when New Labour, in their infinite wisdom, deregulated the banks.
This allowed the banks to speculate in foreign markets, especially the American housing market, with other peoples money. Mortgages were given to people in the USA who had neither the income to make the repayments nor a good credit history. This resulted in a high repossession rate and the UK banks getting their fingers burnt.
The UK is now in the position where the taxpayer has had to bail out the banks, the banks are unwilling to make loans to business or mortgages to housebuyers.
The result is businesses closing down and higher unemployment, a glut of housing for sale with extremely few would be purchasers being able to obtain a mortgage coupled with falling house prices as a result and people unwilling to spend what they have because of this.
Living costs will need to rise to make up for the shortfall in taxation lost through unemployment and the added benefit payouts. This recession will be worse than the 80’s and 90’s as most goods are now imported into this country and sterling is virtually worthless against other global currencies.
A house that would have cost me £40,000 to build last year in Slovenia will today cost the equivalent of £60,000 in Euros.
Gordon Brown & Co are partly to blame - but the main driving force of this recession has been the banks.