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Retirees Strapped with Mortgage Payments

By Jessie Wilkens on October 24, 2011 in ,

In a new twist for the UK, over 25% of those who are looking to purchase their first homes are in their 40s. This is creating a situation where buyers are either being forced to pay off their mortgages with faster than normal terms or to become senior citizens strapped with a mortgage.

Longer Renting

This situation has come about as many are forced to continue renting longer due to job insecurities and credit drought. According to the property website Rightmove and its research, over half of tenants who are currently renting feel stuck and would like to branch out into purchasing property. As Miles Shipside, the firm’s commercial director explains, they “are trapped.”

As he said,

“The global economic woes that have left first-time buyer numbers at record lows will shatter the goals and aspirations of many as they face the reality of renting for far longer than they originally planned.”

Rents Raising as Well

To make matters worse, a report recently found that rents in England and Wales have reached record highs, forcing renters to continue paying astronomical amounts, while keeping them for saving for a purchase.

A study last year by the insurance specialist Aviva showed that 10% of homeowners over 75 are still paying off their mortgage.

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Unemployment Reaching All Time High

By Jessie Wilkens on October 17, 2011 in

If you’re unemployed these days in the UK, you’re not alone. Unemployment levels are, this week, hitting their highest level in 17 years. And experts are warning that those figures are going to increase even more in the next year ahead.

The current Office for National Statistics are estimated to show this week that the number of people without jobs in the UK is beyond two and a half million. The figures are also predicted to show that those in the age range of 16 to 24 who are unemployed is passing one million for the first time in recorded history.

Certainly, these figures are putting further pressure on the coalition and their highly criticized economic strategy. Other pressures are coming from figures that show that the economy only grew by .4% and .1% in the first and second quarters, figures that are much lower than previously believed. Inflation, in addition, is expected to be at the 5% mark in November.

The Bank of England is planning to step in, bringing an additional £75 billion into the economy to try to create growth, but Prime Minister Cameron certainly has his hands full trying to ease this current employment problem.

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Pension Programs Plummeting

By Jessie Wilkens on October 12, 2011 in

Pension programs are on the rocks in the UK, with experts warning that the current figures might prompt employers to close pension programs or to make them less beneficial for their workers. The deficit in the private sector pension funds has grown by £80billion. This is due to the stock market plunge and the collapsing returns people have gotten for government bonds.

Those on the verge of retirement are scrambling to figure out what to do, as the financial issues have recently wiped out as much as 20% of their pension payouts.

As Joanne Segars, the chief executive of the National Association of Pension Funds, has warned,

“Things are only likely to get worse when the latest round of quantitative easing feeds through. Stormy stock markets and weak investment returns have pushed a lot of pension funds deeper into the red. It is another pressure on final salary schemes in the private sector, and they are closing their doors to staff at an increasing rate.”

It’s definitely not the right time to be one of those retiring in the UK.

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Sir John Major Adds to Pressure on Cameron

By Jessie Wilkens on October 10, 2011 in

Prime Minister David Cameron is definitely feeling the pressure these days. Sir John Major has now weighed in, along with others, to put pressure on Cameron to use the eurozone crisis to demand that the UK take back power from the EU.

Just yesterday, Sir John Major surprised those in the Tory circles by declaring that now is the right time to insist on “looser” ties between the UK and the EU. He warned, at a Conservative conference last week, that Europe was going down the road towards a “federal state within the eurozone.”

In terms of Greece’s default, Sir John said that he thinks it’s time to get the default “out of the way” and that the debt default should be done without the eurozone.

Time will tell how PM Cameron will respond to these pressures, but they will certainly be hard to ignore.

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UK Victory Over EU Legislation

By Jessie Wilkens on October 5, 2011 in

The UK just won a major victory against the EU, as they defeated the plan to regular OTC (over-the-counter) derivatives that would have offered the EU financial supervisors the right to supervise who can trade in London.

The EU has been working to pass this directive called the Emir (European market Infrastructure Regulation) that would regulate trading complicated financial instruments. The point of the legislation was to standardize all derivatives products that weren’t trade on a regulated exchange. The French are, apparently, seething over the latest move, as the legislation would offer the Paris-based EU financial supervisor, ESMA, the control over deciding who can be a clearing house for OTC derivatives trades.

The victory is certainly significant, as explained by George Osborne, since 75% of Europe’s OTC derivative trading happens in London. As Osborne said, “Through some hard negotiating we very much improved the directive in the direction that the UK wanted to see.” He continued by saying, “Given our concerns that business should be conducted as well outside the eurozone as inside this is a significant step forward.”

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Positive Outlook for Economy

By Jessie Wilkens on October 3, 2011 in

A new survey offers some optimism for British consumerism. For the first time since May, shoppers appear to be taking a more positive outlook on the economy. The GfK NOP consumer confidence index rose to -30 in September, in contrast to the 4 month low of -31. This survey sampled 2000 people and was conducted from September 2-11th on behalf of the European Commission.

The level was actually 10 points below the level that it was last year, but it was better than expected.

As GfK Managing Director Nick Moon said, “The index’s one-point rise this month is not statistically significant, but it is psychologically important as it halts the decline of recent months.”

The personal finance outlook also improved just slightly to -10 from -11. As Moon indicated, “With economic growth effectively stalled at the moment, retailers would welcome more high street activity, although if consumers are buying German fridges and Japanese cars, this would create quite different problems for the UK economy.”

Although the outlook likes slightly better, stores aren’t expected a huge change in buying practices. Consumers are still holding tight to their purse strings, and stores don’t expected improved spending at the moment.

When looking into hedge funds,there has been an interesting discussion raging back and forth on their role following the worldwide economic crisis.  Some experts are blaming hedge funds for market failures, while others are simply questioning their performance.  However, a recent  study published by  Imperial College’s Centre for Hedge Fund, through deep analysis, came up with an objective position on the merit of hedge funds in the region.  For example,data received from the Hedge Fund Research (HFR) between 1994 and 2011 find that hedge funds had “significantly outperformed equities, bonds and commodities on a risk adjusted basis.”  So according to this analysis – at least with accurate hedge fund risk management – hedge funds do have much to offer at this time.

 

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New EU Taxes Could Hit the UK

By Jessie Wilkens on September 28, 2011 in

Watch out if you live in London, as new EU taxes might influence your financial transactions. This is the news coming from the European Commission as it proposes a large scale new EU tax. Spearheaded by Jose Manuel Barroso, the European Commission president, the law would apply to “all types of financial instruments” that are being used by European investors.

Pushing for the Tax

The main countries pushing the measure include France and Germany, while British diplomats have said that they will block a transaction tax that hits across the 27 EU states. Those who know Mr. Barroso’s tactics well say that he may continue with the plan while allowing those states that want to opt out to do so.

Tricky Business

The tricky, and hotly contested part, of the plan is that it includes a broad definition of tax residency. So, if a transaction involves one EU state and one state outside of the EU, they would be hit with the tax even if the interaction took place in London, Asia or the United States. As the draft for the proposal said, “When transactions are carried out on trade venues outside the EU, they will be subject to tax if at least one of the establishments carrying out or intervening in the transaction is located in the EU.”

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Good News for UK Banks

By Jessie Wilkens on September 26, 2011 in

UK banks should be smiling today. That’s because Barclays PLC Chief Executive Bob Diamond announced on Sunday that the UK is, once again, a “very good place” to do business. This announcement came as a result of the publication of the Vickers report, which evaluated whether or not to split up retail and investment banks.

Report Results

Diamond explained that the result of the report, which offered banks until 2019 to get their retail banking business back from investment banks, is something that “we can live with.” He explained that the UK now looks like a great place to do business, as the Vickers review ended uncertainty in the region and the government is working to reduce its budget deficit.

Panel Discussion

Diamond made these remarks while sitting on a panel with other senior financial officials at the Institute of International Finance in Washington. Also on the panel was Andrea Enria, the chairman of the European Banking Authority.

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IMF Warns UK about Future Predictions

By Jessie Wilkens on September 21, 2011 in ,

The International Monetary Fund offered a blow to the UK on Tuesday as it cut the growth forecasts for the UK economy. The UK predicted that it would expand by 1.5% this year, but they are expanding, instead, by just 1.1% in 2011. The IMF warned that the UK stands a 17% chance of falling back into a recession.

This news is certainly a blow to Chancellor George Osborne, who has signaled that he plans to trim the growth forecast that he had for 2011. The IMF warned, however, that he should also lower the predictions for 2012, not just for 2011. The IMF said that the UK is set to grow by only 1.6% next year, which is a .7% drop from its June forecast.

The Fund stated that, “There is some evidence that drops in equity prices are associated with a greater chance of a new recession in a number of economies.” The IMF continued by saying, “Although the recession has ended, many economies continue to operate far below pre-crisis trends. Output losses relative to trends are largest for economies that were at the epicentre of the crisis, such as the United States and the United Kingdom.”

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Disassociate from the EU, Say Some in the UK

By Jessie Wilkens on September 19, 2011 in

In an unprecedented move, British government MPs are trying to influence David Cameron to set out a clear plan for moving away from the EU. A cross-party coalition is putting pressure on the government to do so, and quickly, as fears grow about the economic impact on the UK that the eurozone is causing.

As George Eustice, the group’s leader, said, “This issue is now far too important to sweep under the carpet. The crisis in the eurozone requires all three parties to work together to negotiate a new relationship between Britain and the EU.”

The most recent action came as Chancellor George Osborne warned that “time was running out” to solve the problems with the eurozone.

Certainly, these issues aren’t new. As Labour MP John Cryer explained, many Labour MPs didn’t want to join the single currency; now, they feel the same way about the EU in its entirety.

Time will tell is Labour and others can turn the UK away from the EU. Those in the anti-EU party have certainly had their position boosted with the 100,000 name petition that was delivered to Downing Street this month and that called for a vote on EU membership.

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