Credit Crunch – It’s a Hic Up!

11th January 2008

The banking world is certainly in turmoil at present but we believe hat it will sort itself out by the middle of the year as there seems to be a very determined international initiative by central banks to improve the current availability of cash. 

There are many other positive messages coming from the UK economy, including Wakefield. 

The high rate of house price increase seen between 2001 and 2007 has meant that many more people have a great deal more equity in their homes which was certainly not the situation in the recession of the early 1990’s.  Additionally, there is currently very low unemployment both nationally and particularly in Wakefield.  The decision of the Bank of England to cut interest rates last month with an implied promise of more to come will ease the debt burden of many people as we progress into the middle of 2008.  It is worth remembering that the UK has the highest bank rate of any of the big developed economies. 

Although the weaker pound will mean more expensive holidays it does make UK exports more attractive and this should help to rebalance the economy after a decade in which the pound has looked over-valued.

The Chartered Institute of Personnel and Development is predicting the first interest rate cut of 2008 when the Bank of England’s Monetary Policy Committee meet in the third week in January. 

Let us hope so!