Category Archives: Economy

What do you think about the state of the UK economy? Check out our opinions in our range of guides and articles in this category.

Brits Driven Off Roads By Growing Petrol Costs

Recent figures by the Department of Transport suggests that the ever increase in fuel prices are not only “fuelling” the recession but are actually pricing British motorists off the road completely.

With the cost of petrol teetering on the 140p per litre mark there is a very real fear that the ongoing hikes are simply going to bring the country to a standstill. The figures show that country roads saw a drop by 5.2%, heavy goods traffic dropped by 4.4% and the category that covers motorbikes, buses and coaches saw a whopping 19.2% drop.

The OFT have started an investigation into how oil companies set their pump prices… which is fine but let’s not forget that the UK Government keeps adding on fuel duty. It’s all very well the OFT investigating the firms behind our fuel but there is a strong suggestion that the source of our motoring misery lies with the politicians.

Quentin Wilson, a spokesperson and motoring expert for FairFuelUK told the Mirror:

“The Government has to recognise that the huge cost of filling our cars and vans has contributed to the recession.

“The first thing the Treasury must do is to bin the 3p tax hike planned for January and listen to FairFuelUK’s economic research, that shows a significant cut in fuel duty will stimulate growth and create jobs.”

In addition to this the cost of fuel is believed to be behind the spiralling debt problems in the UK as many low income families, young people are turning to credit cards or payday loans to help fund their motoring.

Inflation… What’s That?

So inflation is on the increase but what does that mean for you? Think about it for a minute – what do the economists mean when they’re referring to changes in inflation? Let’s take a quick look at what inflation is and how it affects you.

A few facts:

In basic terms inflation is a rise in price in the general level of prices of goods and services in the economy over a period of time.

As the general price level increases, each unit of currency buys less goods and services.

Oddly enough – it really is as simple as that – so the next time economists and politicians complain about high inflation that is all they’re referring to.

It’s the likes of high inflation that see’s many people turning to their credit cards or payday loans in times of need… not always the best choices of finance but a need many of us face on a day-to-day basis.

Want a more detailed explaination on how inflation works? It’s a pretty simple calculation:

Inflation Rate = Consumer Prices Index (CPI) X Retail Prices Index (RPI).

But what is a RPI or CPI?

RPI simply measures the change in the cost of retail goods.

CPI measures the changes in the price level of consumer goods and services purchased by households.

As these levels increase so does inflation… simples!

Payday Loans On The Cards For Millions Of Brits

Insolvency experts are expecting to see an increase in British consumers taking out payday loans over the next six months or so.

With the impact of high inflation, low income and high unemployment, many British consumers are expected to turn to payday loans to last them until payday, insolvency experts have claimed.

Insolvency experts, R3 have reported that they expect the number of people taking out payday loans to increase based on the responses of 2,000 people.

The survey by R3 showed that 60% surveyed were concerned about their level of debt and, probably more worryingly, 45% struggled to make their money last until payday. This actually increased to 62% for 24 – 44 year olds.

The £2 billion-a-year payday loan industry is thought to be a cheaper alternative to than going overdrawn or facing a credit card charge, hence why they are becoming more popular than ever.

However, consumers are urged to ensure they re-pay the short term loans back as quickly as possible, otherwise they could end up facing more expensive roll-over, monthly charges – known as deferrals in the industry.

With the increasing number of people turning to payday loans, otherwise known as payday advances, both politicians and insolvency practicioners are becoming increasing concerned about the number of people falling into debt. As a result they have called for a standardised industry code of practice to be introduced to help ensure that customers are treated fairly.

In spite of this the majority of authorised payday lenders, such as Wonga.com, PaydayUK and QuickQuid, are members of the consumer finance organisation, an authority that strives to regulate payday loan firms and other financial organisations that are not necessarily controlled by the Financial Services Authority (FSA).

This writer has a feeling that 2012 will prove to be a very interesting year for payday loan firms, especially now tighter regulations are being called for from all sides…

Economically Did David Cameron Make The Right Decision For The UK?

Following David Cameron’s refusal to sign the EU treaty, the question over whether he did the right thing for the UK has been debated to quite an extent over the past week or so and many still appear unsure.

Let’s take a look at a quick summary of Mr Cameron’s decision:

The EU treaty promised no concessions to the UK yet Europe wanted the UK to help bail them out of a mess created by the european currency.

If David Cameron had signed the treaty the UK would have resulted in the UK submitting our entire national budget to the European Commission. In essence we would have been relinquising our sovereignty to an all-powerful European super-power.

Mr Cameron’s decision not to back the treaty was to protect British interests – not European.

Even pro-European, Nick Clegg supported David Cameron’s decision on this by commenting:

“The demands Britain made for safeguards, on which the coalition government was united, were modest and reasonable. They were safeguards for the single market, not just the UK.”

The important thing to note in all of this – in spite of the state of the Global economy, The UK is still a financial super-power with a large percentage of the World’s market operating from London. Allowing Europe to take control of our national budget would be, not only economic suicide, but would also lead to a loss of our identity as British citizens. We would merely become citizens of a European super-state.

Call me a euro-sceptic if you like but let’s face it – would you want to be lumped into a european economy with the poor state of the likes of Greece and Portugal?

Irregardless of that it is important to note that David Cameron does support the need for stability for the european economy (euro) as it is in the UK’s interests.

I’ll be watching this space over the next 6 – 12 months. Let’s hope David Cameron doesn’t buckle under pressure… or worse, lose the election to Ed Milliband. Then we’d all be screwed!

Fuel Prices Start To Rise… Again!

The price of fuel is still adversely affecting motorists’ credit cards and bank accounts throughout the UK, a new report by the AA has revealed.

A recent report by breakdown service, the AA, has revealed that the slight dip in petrol and diesel prices appears to be over. As a result British motorists could be in for a hard time, feeling the effects on their bank accounts and credit cards.

After fuel prices initially dropped lower in mid-June they appear to have edged up in the last few days. The average price of petrol now sits at 136.07p per litre, down by 0.86p on the same time last month but more than the 135.75p per litre reported in the first 5 days of June. Diesel prices have followed a very similar trend.

The AA have said that, in spite of the fall in fuel prices, UK petrol drivers have been denied much of the saving that the crash in oil prices should have allowed. It should be noted that their was a significant fall of 16 dollars a barrel. This indicates that the petrol companies are short changing their British customers by aroun 2p per litre, or £1 a tank.

Edmund King, president for the AA, suggested that on average a two-car family could have saved £8.49 over the month and potentially could have improved poor inflation figures.

Mr King added:

“Without transparency in the oil and fuel markets and a regulator to ensure fair prices, drivers, consumers and the nation are open to being ripped off by whoever wants to make an extra buck.”

Mid & Low Income Families Feel The Pinch

Middle and low income families are feeling the effects of credit card and personal loan debt, in spite of economic recovery, a new report has announced.

Whilst the UK’s economy has continued to improved at a laboriously slow rate it is unlikely that many low and middle income families will feel any real benefits until 2015, a recent report by the Resolution Foundation has revealed.

The organisation suggested that the living standards of many families on low and middle incomes were feeling the pinch even before the recession hit. With an estimated 11 million workers on low to mid incomes many continue to feel it’s effects.

The Resolution Foundation based its analysis on Government projections, indicating that average pay is set to flatline until 2015 when it’s expected to increase again. In fact, the group suggest that, come 2015, pay levels are expected to be back at what they were in 2001!

With personal credit card and personal loan debt at high levels, combined with falls in the volume of “middle skilled” jobs available the quality of living for many is likely to suffer.

James Plunkett, Secretary to the Commission on Living Standards for the group, commented:

“We all know that the recession has hit living standards hard but something deeper has changed in our economy – even during the so-called boom years, ordinary workers weren’t seeing their living standards rise.”

Mr Plunkett added that “the big question now is what will happen when growth resumes – will ordinary workers reap any of the benefits? This report suggests that is far from certain.”

Pre-paid debit cards could help cut the cost of summer holidays.

With people struggling to cope with rising bills for everything from food to electricity, many will probably be thinking of having their holiday at home this summer. But getting away from it all can be very important, and if consumers play their (plastic) cards carefully, they might enjoy a holiday for less than they thought.

It’s possible to start saving with a MasterCard® prepaid debit card from the moment a flight is booked. For example, the Ryanair £5 each way booking fee can be avoided if a prepaid MasterCard is used to pay for the airfares. So straightaway there’s a saving of £40 for a family of four booking return tickets straight-away.

Some prepaid cards, such as the Cashplus Prepaid Gold MasterCard, even provide access to a Cashback site with some truly amazing offers – for example up to 25% Cashback on flights booked through TravelSpec.

Prepaid cards can also help travellers to avoid the risk involved with carrying large amounts of cash around. The customer just loads up a prepaid card before they leave the UK and then uses it at cash machines abroad to withdraw their money in the local currency. A traveller could use a prepaid card with a GBP account anywhere around the world that their card is accepted, or they could choose a card already in the currency of the country being visited. For example, Cashplus offer both a Euro currency card and a US Dollar card. These cards are linked to the cardholder’s GBP account, making it easy to move money to and from their currency card(s) online – at home or whilst abroad.

As well as saving money, prepaid cards can help prevent people from losing money. After all, if you lose cash it’s usually lost forever! But if a currency card is lost or stolen whilst abroad, the cardholder can just phone the card provider to cancel the card. As long as the card has been used sensibly, in line with the providers’ Terms and Conditions, the money on the card when it was lost can simply be transferred onto a new card, or into their GBP account.

Prepaid currency cards aren’t just a convenient way to carry travel money, they can also offer a good foreign exchange rate. Some currency cards, such as those offered under the Cashplus brand, can save you money by not charging a foreign exchange (FX) fee, and the card is even provided for free!

A prepaid card could also help travellers to stick to their budget by reducing the risk of overspending. Cardholders just top up their card with the amount that they can sensibly afford to spend whilst abroad – the cardholder can’t start spending money that they don’t have.

Finally, it’s worth considering that over the last couple of years, over 60 airlines and holiday companies have gone bust, leaving many people stranded or out of pocket*. But booking with certain prepaid cards can save an awful lot of money and worry as they can offer Free Purchase Protection, designed to help consumers get their money back if the worst happens – from holiday companies becoming bankrupt to buying something that turns out to be faulty. This type of protection is rarely offered with debit cards.

So people wanting to enjoy a cheaper holiday, with travel money at a great exchange rate and with protection from ailing airlines should give their wallet a break with prepaid cards.

If you’re looking for a pre-paid card to suit your needs why not compare pre-paid debit cards with Creditwindow.

*Source: www.themoneystop.co.uk/052010/are-you-protected-if-your-airline-goes-bust.html

Guest Author: MyCashPlus

British Consumer Credit Impacted By Rising Cost Of Energy

The rising costs of energy is severely impacting customer credit, with some experts suggesting that it could increase by 50% over the next 4 years.

Utility bills, including gas and electricity, are expected to increase by a whopping 50% over the next four years as gas and electricity suppliers look to offset rising wholesale costs. Further taking it’s toll on consumer bank accounts and credit cards.

This year alone we are expected to see an increase of 15% in energy prices, according to the Bank of England Governor, Mervyn King. However, it’s also been noted by Deutsche Bank that even higher bills are possible from 2013 should suppliers attempt to protect profit margins.

With the average household income dropping back to 2005 levels, high inflation levels and the ever increasing cost of living, many are concerned that this could further impact consumers throughout the UK. Some economists have even ventured that, should earnings and benefits fall further it could represent the most significant fall in “median incomes since 1981.”

Since many people around the UK are already suffering from significant from personal loan, credit card debts, unemployment and crippling taxes, it’s proving more and more urgent for changes to welfare reform and the availability of credit where it’s needed. The Work and Pensions Secretary,

Iain Duncan Smith, commented:

“This underlines the urgent need for our radical programme for Welfare Reform and especially Universal Credit which will make work pay and end the madness of generations living on benefits with no reason to aspire for more.”

Mr Duncan Smith went on to add that Government plans will help around 1 million people out of poverty and back into work. This is expected to end “the depressing spiral of a lifetime on benefits that blights too many of our towns and cities.”

In a positive move to controlling energy regulations and costs, Ofgem have been investigating the cost of gas and electricty suggested that energy companies respond very quickly in raising their prices when costs increase, however, they are a lot slower in responding when costs fall.

Hardly surprising is it? It’s all about profitability at the end of the day - it would just be nice to see an “ethical” energy company who responds to the needs of their customers – maybe it’s time for a shake-up, similar to the one the banks received when the British economy collapsed.

Image: graur codrin / FreeDigitalPhotos.net

Banking Reform On The Cards For Tax Payers

The UK’s economy has felt the reverberating affects of the recession and many of the country’s banks were brought close to collapse.

As a result the Independent Commission on Banking (ICB) has released proposals to change the way in which banks operate. If the UK government gives the go-ahead on these proposals the British people could see major changes in banking security and competitiveness, improving both services and products.

Published earlier this week, the ICB’s report sets out their plans for a new and safer banking system that limits the risk to customers’ money as well as liability to the tax-payer if a bank should fail.

Key changes to the banking system:

1. Retail banking (mortgages, savings, credit cards and current accounts) will be kept seperate from far riskier investment banking (stocks and shares dealing). In addition to this the ICB have suggested:

• Banks are to put a “worst case scenario” plan into place that allows their retail banking to continue servicing the need of customers, even if the investment banking fails.

• Banks will have to set a limitation on the extent to which the retail section can bail out the investment side of the bank should it get into financial difficulty.

2. Banks are to make it a simpler process to switch bank accounts. Including:

• Introducing portable account numbers so that customers will not need to change direct debits and standing orders if they switch accounts.

• A seven day transfer period to be enforced to speed up the process of switching accounts from one bank to another.

3. Lending Criteria for financial products and services, such as personal loans, mortgages and credit cards should be make more flexible.

4. Larger banks such as Lloyds Banking Group should be made to sell off more retail branches as they currently provide up to 30% of all british current accounts. The ICB feel that this financial burden should be reduced.

It’s believed that, once the proposals have been scrutinised, the ICB will present their suggestions for banking reform to the British Government.

The final decision will lie with the Government to decide whether the benefits outweigh the risks to the tax-payers and whether further rules and restrictions will push the large banks off of British soil.

In spite of this it should be noted that the ICB began this investigation at the insistence of the Chancellor. This suggests that, if not all, then many of their recommendations are likely to be put in place.

Check out our great range of bank accounts to find the right one to suit your needs.

Rising Cost Of Food Impacts Consumer Spending

A recent report by the British Retail Consortium (BRC) has reported that food prices have started to creep back up again over the course of April, impacting our wallets and credit cards.

The report showed that the price of food in supermarkets increased by 1.2% between March and April, adding even more misery for cash-strapped customers and putting even more pressure on the Bank of England to drive-up the base interest rate.

The BRC have blamed the hike in price of food in shops on the cost of fresh fruit, dairy products, eggs and cooking oils.

In spite of food price inflation slowing in March due to retailers putting more special offers to attract cash-strapped consumers this appears to have had little to no affect on the longer-term implications. In fact it’s thought that this was one of the main reasons for the consumer price index falling by 0.4% in March from the previous month.

Economist with Barclays Capital, Chris Crowe, has suggested that the growing cost of food will help to push the CPI up by 0.2%.

The Bank of England’s Monetary Policy Committee are expected to announce whether it is to raise the base interest rate on Thursday from their record low of 0.5% in an attempt to curb the CPI, which is more than twice that of its 2% target.

The BRC director general, Stephen Robertson, suggested that retailers’ efforts to generate sales by heavily discounting goods over Easter “were key to holding back prices on non-food goods.”

Mr Robertson went on to add that “the upward pressures on food prices, which eased in March, bit back in April.” However, the consolation for consumers is that there is still a large number of offers to be had and the fact that 40% of the groceries being bought are on promotion clearly indicates that customers are still taking up those offers in a big way.

If you’re struggling with credit card debt check out our range of debt management guides on our blog or find a debt consolidation programme to suit your needs.

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