Go Direct Aricles - Economic Worries for 2008

9 Jun 2026

Economic Worries for 2008

It’s been a very bleak mid winter for the economy. Stocks and shares have taken a pummelling and momentarily zipped back up again, and more financial jitters are to be expected. The financial roller coasters have mostly been caused by a fear that the USA, the world’s biggest economy, is heading for a recession, which could affect economic growth across the world. A report by the Deloitte Economic Review has recently noted of a likely downturn in the UK economy in the current year, and the risk of recession is looming over the next two years.

It’s hard to think of who this kind of talk is good for, but at least it prepares us for when things do run out of steam. Certainly those with stocks and shares or an ISA have seen some of their investments hit, but there are plenty of others outside the reach of the stock market who will see themselves challenged. Businesses face a tough year as they combat the credit crunch and rising food and energy costs, and it also appears that homeowners are going to have to endure a year wondering if prices are going to tail off.

The likelihood of a lack of available credit is one of the biggest tests to business this year. One of the most important features of business is to keep up the cash flow, and if it’s going to be a more difficult year to make profits, then loans will be needed to keep the flow up. Unfortunately, banks will be reigning in their lending, and will more than likely only approve of people with good credit ratings for the top rates. If you’re a small business owner, see Alliance and Leicester for good rates on loans. There is also the problem of weak growth in the business sector leading to many more companies laying off staff. Already a number of firms have announced cutbacks in the city, and more jobs will probably be shed over the year. Worryingly Deloitte has said that true unemployment could rise up to 2 million by 2009.

Falling house prices are usually a problem for the UK economy, as it shows that prices have overstretched themselves and outweighed salary increases. Deloitte believes that prices will dip by 5% in the coming year and 8% in 2009. Such predictions add fuel to the fire of those that say a downturn is inevitable. David Kuo, from the Motley Fool financial website, has said that the average house price is set to drop by up to 20% this year. Not everyone shares such a view though, and most commentators seem to believe that house prices will see a slight fall or remain flat in what is a subdued market.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

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