The Financial Blog

Technically we’re heading for a recession according to the British Chambers of Commerce (BCC).

The latest economic forecast from the BCC says that a full scale recession, last seen in the early 1990’s, is unlikely but they predict that there will be 2 or more months of declining growth in the UK economy during the next 12 months; which technically means a recession…

The BCC’s economic adviser, David Kern, said: “Our quarterly economic forecast highlights a significant worsening in UK economic prospects. There is now a distinct possibility of technical recession. The level of UK unemployment is likely to increase to nearly 300,000 over the next few years, reaching almost two million. An increase above two million cannot be ruled out.”

“Our view is that the threats to growth are more serious and more immediate than the risks of higher inflation, the UK economy urgently needs an interest rate cut to counter threats of recession.”

During July this year 20,100 more people were claiming government unemployment benefits. This is the biggest monthly increase since December 1992 and the total amount of people now receiving unemployment benefits now stands at 864,700.

These latest figures come from the Office of National Statistics who say that the number of job vacancies is also down.

Commenting on the figures Howard Archer, of analysts Global Insight, said: “It seems inevitable that extended very weak economic activity and deteriorating business confidence will exact an increasing toll on the labour market over the coming months.”

Monday saw Morrisons kick start what should be a fuel price war amongst supermarket petrol stations, with yet another £0.02 per litre cut in the price of diesel and unleaded petrol.

Morrisons said that in the last 20 days they’ve cut an amazing £0.10 off a litre of diesel and £0.08 off a litre of unleaded petrol. They estimate that customers will benefit to the tune of around £5 per full tank of fuel. A much needed restbite for commuters who have no choice but to use their cars for work.

Morrisons is the UK’s 4th largest supermarket leading the way when it comes to fuel prices on their forecourts. Last month saw the first round of fuel price cuts with Asda, Tesco, and Sainsbury’s all following in Morrisons footsteps.

Phil Maud, petrol director at Morrisons, said: “Monday morning will seem a good bit brighter for drivers today with yet more welcome news from Morrisons.”

“We’ve proved it over and over again. When the price of crude and refined product falls, our customers are the first to see the price at the pumps fall as well, with no catches.”

“This is another simple price-crunching reduction and shows yet again that we’re committed to delivering real value for all our customers - whether they’re filling up at our forecourts or shopping in our stores.”

In the last month the price of oil has dropped almost $30 a barrel and the theory is that slower economic growth is reducing global demand. The question I’d like answering is why isn’t $30 a barrel less reflected in even lower fuel prices here in the UK?

Not surprisingly, but perhaps this could be seen as a warning sign for this government; almost half of us, 46 per cent, are worried about rising fuel costs.

This new research from fool.co.uk reveals that people are truely worried about food, fuel and energy prices. According to Fool.co.uk’s inflation index our current rate of inflation is actually 9.3 per cent!

More and more people think they’re personal inflation is soaring and only 4 per cent of people agree with the government’s inflation figure; currently around 3 per cent.

Some alarming figures also reveal that we’re now starting to loose sleep as we worry about prices. 49 per cent of men worry about fuel prices and 24 per cent of men worry about energy prices. While women, 39 per cent, are worried about fuel and 31 per cent worried about food prices.

David Kuo, Head of Personal Finance at Fool.co.uk, says: “The Government can easily put these worries to bed. All it has to do is slash tax on fuel, which is giving half of British consumers’ sleepless nights.”

“But instead Chancellor Darling chooses to fill his coffers at our expense. Currently, 60% of the advertised price for unleaded petrol is taken in taxes3. The Chancellor gobbles up 70p out of 120p every time we fill up our cars. In January, he took 64p per litre in taxes, which was already staggering.”

“Nobody likes to be taken for a ride. But blaming the high price of oil for our travel woes when the Government is the source of three-fifths of the misery is one ride that must stop.”

“The Government loves to make a meal out of windfall profits. That is unless it happens in its own backyard. But this is one meal that consumers find unpalatable, especially when they are feeling the pain and the Government is making all the gain.”

I like Mr Kuo! and totally agree with him.

>>Get comparing energy prices now!

>>Get the best prices at the supermarket with Mysupermarket.com

Moneyexpert.com say that if you’re a tenant you are more likely to spend double the proportion of your disposable income on energy bills compared to mortgaged homeowners.

If you rent you expect to spend up to 13 per cent of a weekly disposable income on gas and electricity bills compared to only 5 per cent if you’re a homeowner.

Of course industry experts are predicting a staggering 40 per cent increase in energy bills this winter, increasing your anual bill be something like £400! According to moneyexpert.com research the average cost of a combined gas and electricity bill was £924

One of the reasons that tenants pay more is because they often leave it up to their landlord to decide which utilities provider supplies the property. Sean Gardner, director of MoneyExpert.com, said: “Tenants typically pay out more for their energy and power than homeowners. Whether as a total per household or the average per capita, the simple fact is, more of your money goes on fuel.”

“Theoretically suppliers do not differentiate between renters and homeowners so it must come down to the fact that tenants just don’t think about changing supplier because that responsibility lies with their landlord. But if you’re paying more than you should you have every right to ask your landlord to look at switching - it needn’t take long and if you can save money it’s well worth it.”

“Monthly bills for a rented home are up by over 10 per cent across the country so renters are feeling the pinch. Paying more for your energy than you need to is not the way to relieve the pressure.”

Compare utility companies now!

Energy expert at Confused.com suggests these money saving tips for consumers facing soaring energy prices (so that’s all of us then!)

You may be able to reduce your monthly payments by;

1. Start switching your supplier: around half of the households in this country have never switched supplier, leaving some homes paying 30% more for their fuel than they should be. It is possible to reduce that overspend straightaway simply by switching to a better value tariff - there are more than 14,000 to chose from - which does not even always mean changing supplier. By switching to the best deal available, the average customer, who has never before switched energy suppliers or tariffs, can make a saving of £284.62.
2. Consider capping: with the wholesale cost of energy almost double what it was last year**, and further increases expected, now could be the time to switch to a capped-price tariff. If utilities companies up their prices again - and rises of between 10% and 20% have not been uncommon - that mediocre capped rate from your energy supplier could suddenly be very reasonable. If you need some consistency in your monthly spending, consider capped rates.
3. Check your appliances: if you are looking to buy the latest plasma screen, or American- style freezer, take a moment to read the booklet that comes with it. Some household appliances guzzle up electricity so it is worth having a look around your home to see if there are appliances which might be significantly increasing your energy bills.
4. Check your meter regularly: energy suppliers are only legally obligated to read your meter every two years, which means that your energy bills are based on what they think you might use up. Make sure that you check your meter on a regular basis and let your supplier know the reading. Their lines are often open 24-hours-a-day and they will amend your bill accordingly.
5. Don’t inherit someone else’s supplier: a classic mistake to make when you move into a new residence is to stay with the previous owner’s supplier. Make sure that you read the meter as soon as you move in, and investigate the previous occupier’s energy supplier. Unless that supplier is offering the best deal, look to change to a better tariff, or even change supplier altogether. If you want to save money, don’t be lazy - start to investigate.
6. Most importantly, shop around: comparison sites are a great way to compare different suppliers and their tariffs, but ensure that the website you are using is as comprehensive as possible. There are six major suppliers, but some comparison sites do not cover all six, limiting your choice. In order to really save money, you need to search the whole market and all of the available tariffs.

>>Click here to compare energy suppliers now

The Cheshire Building Society say that more and more people are are falling into financial difficulty because of the increases in the cost of living, rising debts and the impact of the all too familiar “credit crunch”. Here is the latest advice from The Cheshire on how to avoid out of control debts and stay ahead of the credit crunch;

Watch your utility bills

Utility bills can be a considerable cost and switching provider can save money. You can also help to cut costs by insulating your home properly, switching lights off in the summer and keeping the tap off while brushing your teeth.

Reduce the cost of fuel

Petrol and diesel costs are rising at record rates and by leaving the car at home for short journeys you can save money and help the environment.

Don’t Miss Payments

Missing payments on debts and bills has a detrimental impact on your credit rating, making it harder to obtain a new or re-mortgage and further credit or loans. If you think you will miss or make a late payment speak to your financial provider in the first instance and they will be able to discuss options with you.

Budget and live within your means

Many people are spending more than they earn and this is a signal for a dark financial cloud. If you have traditionally been a spender, it is never too late to change your ways by becoming a saver.

Be realistic

If you have any outstanding debts, don’t sweep them under the carpet, work out how much you owe and create a budget to get this paid off as quickly as possible.  Prioritise your outgoings and make sure all the key bills, such as mortgage or rent payments and council tax are being paid regularly and on time.

Assess your credit

Address your credit costs and estimate how much each credit card or loan is costing you and what monthly payments you can afford to make. You may be better off transferring your credit card balances to a 0 per cent deal or increasing your loan payments so you can pay the loan quicker with less interest overall.

Don’t forget your mortgage

Although you might have an existing mortgage, it is always worth shopping around in case there is a more suitable deal available for you. Always make sure the savings you make outweigh any extra costs involved in switching mortgage, such as administration and legal fees.

Keep a diary

Try to keep a diary of all your current spending to see where you are perhaps wasting money and what you can cut back on. For example, bringing lunch into work will save you a fortune and is probably healthier too.

Throw out the old

Cancel any monthly direct debits you are paying for and not using.  Direct debits for gym memberships are commonly forgotten, so instead of paying for it and not using it, cancel the monthly payment and take up jogging!

Start a pension

Think long-term savings by reviewing your pension scheme and address any necessary amends that you need.

If you are thinking about remortgaging then click here to find the best mortgage deals

If you want a loan make sure you compare loans to find the cheapest rates

If you are struggling to keep up with loan or credit card repayments click here to get some debt help

Chiltern Debt Monitor June 08

The total average amount of debt has decreased steadily - although disposable incomes have dropped and it’s taking people longer to become debt free, according to the latest Chiltern Debt Monitor. 

• Average level of debt: £25,388
• Average age of debtor: 45
• Yearly gross income: £20,572
• Male: 42%
• Female: 58%
• Average number of creditors: 8
• Affordable payments as a % of contractual payments: 25%
• Monthly living costs: £1,088.75
• Monthly disposable income: £221.24
• No of months to be debt free: 148

The study found that the amount people have left to spend each month, once living expenses are accounted for, has dropped by almost ten pounds and it is taking an extra three months to clear debts, compared to August 2007.

This means that people in debt can realistically only afford to pay a quarter of their contractual credit commitments each month, down 1 per cent.

However, people owe £1,274 less each on average than they did in August of last year, down from £26,662 to £25,388.

Chiltern’s Nathan Gladwell says: “Our figures show that people are applying the brakes sooner with their spending, or seeking help earlier than they were previously which is a positive sign.

“Times have been hard for people struggling to make ends meet, as the credit crunch and higher living costs have reduced options and diminished available income.

“As a result, people may be using overdrafts and credit cards to pay for everyday living, which is how many debt problems start - as each month they go further into the red.

“”Anyone experiencing financial difficulties needs to readjust their spending to more realistic levels and be open to alternative options, like informal arrangements.

“These could help in the short-term whilst finances are brought under control, as debts are prioritised - so mortgage or rent and utility bills are accounted for first.”

The Chiltern Debt Monitor is a regular analysis of Chiltern Debt Management’s database of live customers to determine the profile of debt and debtors in the UK.

Monthly disposable income is calculated before payments on unsecured debts (loans, overdrafts, credit and store cards etc) are deducted.

1 in 6 people have considered quitting their job because the increasing cost of fuel prices means that their daily commute to work is costing too much.

Insurance.co.uk recently surveyed Brits and worryingly found that 16 per cent of people really are struggling to cope with rising fuel costs and would consider such drastic action to cut costs.

25 per cent of people surveyed have chosen to leave their car at home and try public transport and 19 per cent are looking to car share with others.

Fuel prices have risen by 21 per cent over the last 12 months and experts are predicting further increases over the coming weeks.

I’ve heard reports today that a strike by tanker drivers could cause a fuel shortage in some parts of the country but reports like this do not paint an accurate picture and half the time media reporting like this ends up causing panic buying. The actual figure is 1 in 10 petrol stations MAY have a shortage of fuel.

As for public transport most of the time I think you’re better off in a car. It depends where you live, in terms of proximity to a train station and then where you’re trying to get to. Some train journey’s I’ve researched take almost twice as long as the same journey by car! Ticket prices can be high especially if, like everyone who’s commuting, you need to travel in peak hours. If I had the choice it would be a car share scheme for me. I’ve just done a very quick peice of research and found this website offering you the ability to check for car share schemes in your local area, good idea! http://carshare.com/default.asp?region=6#carsharesites

People are also dreaming up more cost cutting methods when it comes to the car - 10 per cent are thinking about not driving their children to school, 15 per cent are thinking about down grading their car, 36 per cent are thinking about purchasing a car with better MPG, and unfortunately 51 per cent of people are considering cutting the amount they’d spend on servcing and MOT’ing their cars.

Head of insurance.co.uk, Steve Grainger, said: “The rising cost of fuel is taking its toll on British drivers in more ways than one. Our research highlights the enormous pressure being put on commuters and the wider economic consequences that may lie just around the corner.”

“In the current climate, it’s more important than ever that motorists take stock of their finances and realise the savings that could be made by shopping around for insurance cover“.

Of course you should also consider shopping around for car insurance online, make sure you take a few minutes to get the car insurance quotes online using one of the comparison web sites like Gocompare.com, insurance.co.uk, Moneysupermarket.com - there are plenty to choose from!

The increase in food, energy and fuel prices has caused the number of people concerned about their debts to jump from 33 per cent to 38 per cent in the last 3 months.

Moneyxpert.com reveals that there are an ever increasing number of people who are in debt with their bank or other financial institutions and these people are becoming concerned about their ability to manage the debts they have.

Approximately 13.1 million people say they’re concerned that they may not be able to make repayments on the debt they have.

Moneyexpert.com say that the increasing cost of living is probably the main reason behind the biggest jump in the UK’s inflation rate for nearly 6 years. This is obviously having a serious affect on people’s ability to repay their debts. With house prices falling every month people cannot use the equity in their homes to refinance in order to pay off existing debts.

Director of MoneyExpert.com, Sean Gardner, said: “There are many economic and political measures of a downturn, but there is nothing quite as real as people in debt saying they can’t repay the money they owe.”

“With close to forty per cent of those who owe money worried about their ability to stay on top of their debts, these latest figures add up to a collective cry for help as Britain’s enormous debt mountain looms larger than ever.”

“But the important thing is to work out a repayment plan and not bury your head in the sand.”

There are professional debt advisory services for people who may be struggling to keep up with repayments on their finances and if you are unsure the best starting point is your local Citizens Advice Bureau.