Rate cuts leading to weakening pound against euro

After signs from the Bank of England that they are set to make further cuts to rates and the poor jobless figures the pound has once again fallen in value against the euro. The pound once again hit an all time low of 1.0756 euro’s before recovering again to 1.0772. The US have also shown that there currency is struggling with a 13.5 year low against the yen. This comes after a further cut in interest rates in the US with them now having the lowest interest rate amongst developed countries. The past few weeks have seen the pound slowly slipping against the euro and it is making exporting goods a lot cheaper. Let us know how the change in interest rates is affecting your business.

Unemployment rose by 137,000 in last 3 months

In the three months to October there was a rise in unemployment by 137,000 to 1.86 million which is the highest level since 1997. This indicates the effect that the credit crunch is beggining to have on companies. Companies are looking at ways of cutting costs to ensure they survive during these difficult times. However, companies must remember that they should keep there most skilled staff as although they cost the most they are the people that will help them recover after the economy has recovered. The Office of National Statistics has said that unemployment is now up to 6%.

The number of people claiming jobseekers allowance in November also rose by 75,700 to a total of 1.07 million which is the largest rise since March 1991. Many companies have made big job cuts as the grip on the economy tightens. As christmas approaches people are becoming more nervous as to whether they will still have there jobs when they come back after there holidays.

Inflation in the UK declines once again

Figures have today shown that inflation has fallen to 4.1% in November which is less of a decrease than was expected. Some economists suggested that they thought inflation would drop to 3.9% in November and were therefore surprised as to what figures showed. Inflation is continuing to fall on the back of a drop in oil and energy prices. However, the CPI is still more than the government’s target of 2%. More economists have voiced concerns that inflation will continue to fall throughout the New Year and some are worried that deflation could be possible.

In terms of the economy this is not good as consumers will hold off purchasing in anticipation that prices will decrease in the future. This will not help the economy as spending is vital to ensure that the economy improves.

Less spare cash for households

A survey released by the Bank of England today has revealed that households have less money to spend because of an abrupt change in peoples circumstances. Household budgets and spending has fallen due to an increase in utility bills, higher food prices and the fall in house prices and the tighter strain on the availability of credit. The survey interviewed 2,500 people and people suggested they now have less money to spend or save.

Only a small number of households claimed that they had fallen behind on their repayments. A further third of the people that were questioned expressed that they struggled at times to make some of their repayments highlighting the great pressures people are becoming under. People suggested that the main reason for this was because of the increase in household bills being higher than expected.

Pound weakens against euro for fifth day

The pound has fallen for a fifth consecutive day against the euro today. It came amid fears that the UK economy could be one of the worst hit by the recession. Interest rates are also at their lowest since 1951 and are lower than those in the eurozone. The pound fell to just 1.1191 euros whilst the euro also rose against the dollar. As the pound slides down against the value of the euro talks have emerged about the UK adopting the single European currency.

Has your business been effected by the decline in the pound? If it has let us know your story. We are always interested in finding out how other people are coping with the current economical climate.

Recession now imminent

The UK economy is now certain to fall into recession according to Chancellor Alistair Darling. The majority of people have expected the UK economy to fall into recession so the news by the government does not really come as a big surprise. However, he did say that he believed that growth was expected in the second half of the year in 2009.
He suggested that the economical situation was difficult but suggested that the reduction in interest rates would help improve things. However, there have been questions over these plans that have been implemented from other countries. There is great uncertainty as to what the economy holds but as bigger organisations struggle people are becoming ever more cautious about spending.

Economy could be at risk warns Cameron

I read an extremely interesting article today whereby opposition leader David Cameron has attacked the government suggesting that the economy could be at risk because of the £20 billion borrowing binge that is going on. He commented on how he thought the country would be in a dreadful situation because of all of the borrowing that is going on. He went on to say that the strength of the pound was also at risk. Although the government have made cuts in VAT and have invested lots of money into organisations to help them with current economic downturn. However, what the government is not keen to voice is that VAT will go back up after a year and by 2011 national insurance contributions will have to increase as well as a reduction in government spending. We would like to hear what your opinions are on this matter so please leave your comments and thoughts.

Repossessions expected to reach 75,000

The Council of Mortgage Lenders (CML) has estimated that there will be a sharp rise in the number of house repossessions next year as it is expected to reach 75,000. That would be as many as there was during the peak of the recession in 1991. It is believed that the steady rise this year will see the number of repossessions reach 45,000.

The nationalised bank, Northern Rock, has said that they will give their customers who are in arrears a six month period before they will repossess their home. This should give them time to ensure that they can get enough money to start paying their mortgage again every month. This would seem a far more logical approach to take as repossessing a home would mean having to find accommodation i.e. council houses for all those that have went into arrears. In the long run this approach would in fact cost more money to initiate.

As rates are cut banks face pressure

After the latest cuts in interest rates banks are coming under further pressure to pass these cuts onto their mortgage customers. Some of the major lenders passed on these 1% cuts in interest rates immediately to those customers with variable-rate mortgages. The UK’s biggest lender HBOS has said that they will only pass on 0.25 of a percentage point onto their customers. Nationwide, the UK’s biggest building society, was also only going to offer a cut of 0.25 but late on Thursday evening decided that they would pass on the full 1% to existing tracker customers.

After the recent bailout to banks from the government it is shocking to think that they are not going to pass these savings on to their customers. Taxpayers money has been pumped into these organisations yet the taxpayers who would expect to gain from the cut in interest rates have not. Let us know your views on this matter.

The pound slumps to new low against the euro

It is expected that the Bank of England will cut the interest rate further today by a further 1% in an attempt to help revive the economy. This news comes as the Pound has fallen to its lowest ever against the euro. The pound has dropped to 1.15 euro which is the lowest since the currency was introduced in 1999.

It is expected that the economy is going to be worse than was first thought and the decrease in the pound will not help the situation. The Bank of England is extremely keen to increase consumer confidence to encourage people to start spending again. However, only time will tell to see if a further cut in interest rates will help the economic situation, and many experts don’t believe it will have a big impact.

Some companies to be hit with VAT changes

As the new VAT rate of 15% comes into power today it has emerged that some smaller companies may actually find themselves worse off because of the cut that has been made. Firms that take advantage of the government’s flat rate tax will now keep a lower proportion of the tax that they take from their customers. This information strongly contradicts the information that was given out on the pre-budget report that said that all companies would benefit. HMRC have said that companies will benefit from paying a lower VAT rate on any expenses that they.

So although some companies will actually pay less on their expenses they will in fact take a lower proportion of tax that they get from their customers. There is a growing debate from many parties as to whether the cut in taxes is actually a benefit to smaller organisations or if it is in fact going to make them worse off.

Consumer confidence in Eurozone at a 15 year low

Confidence among consumers and businesses has fallen to an all time low in 15 years within the eurozone. The economic sentiment indicator has dropped from 80.0 in October to 74.9 in November. This is a big fall and most analysts are expecting the ECB to cut interest rates next week to try and encourage consumer spending. A spokesman from Commerzbank has expressed how he thinks the eurozone is in a deep recession. This is supported by the fact that the economy has contracted for the two previous quarters and is therefore technically considered to be in a recession.

The European Commission has this week announced a package of 200bn euros to try and help the economy turn itself around by encouraging consumer spending. The end of Decemeber will see as to whether the UK economy is officially in a recession. It is expected by most analysts that this will in fact be the case.

200bn euro plan announced by Europe

The European commission has announced a European economic plan worth 200bn euro’s to try and help save jobs in Europe as the credit crunch kicks in. The commission expects the European member states to contribute 170bn euro’s while the European union will contribute the further 30bn euro’s.

The plan is aimed at boosting customer confidence and at encouraging spending within the market once again. Some of the money that is being pumped in will be used for job training, less polluting cars, and improving energy links and broadband access.

Aid to small and medium enterprises over the next two years would be increased from 10 to 30bn euro’s.

Data confirms that economy is shrinking

Figures have today suggested that the economy shrank between the periods of July and September by 0.5% it has been revealed by the Office for National Statistics. This is the first time since 1992 that the economy has reduced in size. If the economy shrinks between October and December the country will officially be in a recession.

The figures also revealed that household spending in the third quarter fell by 0.2% which is the biggest drop since 1995. It appears that people’s money belts are tightening as the effects of the economy are starting to hit home.

The government are trying to revive the economy with plans to reduce VAT and to help those people in most need of support during these difficult times. However, to achieve this the government are lending exceptional amounts of money. Therefore when the economy turns around the government will have to try and recoup this money through increasing taxes and such like. What are your views on this issue?

An increase repossessions as they rise by 12%

The third quarter of the year has seen a considerable rise in the number of repossessions. The figures show that this quarter alone has seen a rise by 12% taken the amount of homes repossessed during this period, 11,300.

The number of borrowers who have gone into arrears has also risen in this quarter and now stands at 168,000, a rise of 8%. The figures show that many people are likely to lose their homes as the economy falls into recession. As the economical future looks bleak no-one will know how many people will fall into arrears or the chances of their homes being repossessed. It has been predicted that the next year will see times getting tougher and people will have to cut their costs by as much as possible to ensure that they avoid having their homes repossessed.

It is also proving tough for landlords with buy-to-let mortgages as they are struggling to rent out their properties.

Stock Markets affected by Recession fears

As it is feared the world economy is entering a downturn where European and Asian markets have seen dramatic falls today. By midday the London FTSE was 1.7% down and mining shares were hit the hardest. French and German markets also seen a fall. In Japan there market fell by 6.8% and Hong Kings main index fell by 4%.

If markets are fallen so dramatically this is going to have a knock on effect to consumers who will become worried about the future. This will then have a knock on effect to businesses. Therefore, it is more important than ever for businesses to ensure they collect any unpaid bills and collect any debts that are still owed to them. BACK inContact can help you with your debt recovery so why not contact us today.

9 – 0 votes to cut interest rates to 3%

It has been revealed today that the setters of the interest rate all voted unanimously for a cut in interest rates which saw them fall to 3%. The minutes of the meeting show that the Bank of England setters all agreed that interest rates should be cut and most of them agreed that it should actually be dropped by more than it was. However, it was decided that this would shock the markets too much and therefore only dropped the rate by 1.5%. The minutes show that a 2.5% drop was considered. There were suggestions that in the upcoming months there would be further cuts to the interest rate. The rate is intended to stop inflation fallen too far below the Bank of England’s target for next year.

The next few months should indicate as to whether the fall in interest rate has helped the economy and we will also see if there will be any further cuts.

Unemployment expected to reach 3m by 2010

The business group CBI has today said that it believes the recession faced by the UK will be tougher and longer than first thought. That isn’t the kind of news that people wanted to hear especially as Christmas is around the corner. They believe that in 2009 the economy will shrink by 1.7% which is a dramatic rise to what they predicted in September suggesting that the economy would only shrink by 0.3%.

The group has also said that they believe unemployment will increase to 2.9 million by 2010 compared to the current figure of 1.8 million. The government have defended their actions of increasing borrowing to try and boost the economy. The government has said that although they didn’t create the recession they will take every step to try and make it as short and painless as possible.

Eurozone falls into recession

The eurozone has officially fallen into recession it has been announced today as the third quarter has seen the economy shrink by 0.2%. This follows a fall in the previous month of 0.2% between April and June.

Two months of negative growth defines a technical recession. The news announced today was widely anticipated as two of the eurozones biggest economies, Italy and Germany, had already announced that they had fallen into a recession.

On Thursday Germany had announced that there economy had shrunk by 0.5% in the third quarter and with Germany’s economy being one of the biggest in the world the news was half expected. It is also believed that Spains economy will fall into recession in the next quarter because of the slump in household spending and the property crisis.

Sharp decrease in interest rates

There was a shock move today as the Bank of England cut interest rates by an unexpected 1.5%. Interest rates now stand at 3% and is an attempt by the government to try and help rebuild the economy. The cut comes after recent weak data about the economy was released. It is the first time since the Bank has cut rates by more than 0.5% since its independence in 1997. It is also the biggest cut since March 1987 when interest rates were cut by 2%.

There were concerns that the cut in interest rates would not be passed onto customers and this is something Gordon Brown wanted to address. Some banks have said that they would pass the full amount onto their customers whereas others have not yet commented on what they plan to do. It is also believed that the cut in interest rates will also help manufacturing companies who have been struggling in the past 7 months.

House prices driven down by low sales

The Nationwide have today claimed that house prices have continued to fall in October and are now 15% cheaper than a year ago. The latest survey that was carried out by building societies has found that house prices have fallen by 1.4% in the past month. This takes the annual rate of fall from 12.4% to 14.6%. The price of an average house is now nearly £30,000 cheaper than it was a year ago. This will lead to a lot of people being in negative equity as they will be paying more money than the house is worth.

Nationwide have claimed that the fall in house prices is due to the reduction in sales, which are now at there lowest for 34 years. With a recession looming and the instability within the financial market; they are both having a major effect on the housing market. House prices have now dropped for 12 consecutive months. It makes it a lot harder for first time buyers to get there foot on the property ladder. As the banks try and return stability to the financial marketing it is expected that there will be a sharp cut in interest rates which may help buyers.

£1.8 trillion lost in world credit

The Bank of England believes that financial firms have now lost around £1.8 trillion due to the continuing credit crunch. It is believed that central banks and governments have now spent £5 trillion trying to support banks and prevent them from going down.

The bank also warned that if the recent sharp fall in house prices continue 1.2 million homeowners will fall into negative equity. The Bank of England has said that banks could face a lot stricter measures to stop this from happening again. The estimate the bank made on global losses has now doubled since the original estimation in May.

As the economy slows a Recession looms

For the first time in 16 years the economy has shrank between July and September. This confirms that the UK is on the brink of a recession. The drop was bigger than expected with output falling by 0.5%. This saw a knock in UK shares and the strength of the pound fell. If the economy slows in the fourth quarter of the year the UK will be classed as being in a recession.

The chancellor has voiced his confidence in the UK and believes that they would be able to get through it. He commented that it would be a difficult period but was confident that the UK would be able to work through it. The chancellor believes that the UK has to work with other countries to ensure that the efforts are replicated throughout the world.

Consumer inflation reaches 5.2%

In September UK inflation hit 5.2% and this was blamed on the rise in energy bills. However, analysts have expressed that this should be the peak and inflation should begin to fall as a result in the lower price of oil and the fall in consumer demand as the economy tightens.

The Consumer price inflation rose from 4.7% in August. The key issue to be aware of now is to see how far inflation will drop as the food and energy effects slow down and in some cases go into reverse.

Septembers Retail Price Index (RPI) which is used to work out benefits and state pensions in the coming year reached 5% compared to 4.8% one month earlier. Pensions usually increase by 2.5% or by more than the RPI – whichever is higher. This means that the government faces paying billions of pounds more in benefits and pensions.

The recent economic downturn has seen a change from inflation to recession being the key risk to the UK economy. Lets hope we can battle through and face any challenges that are thrown at us.

Bail out of £37bn unveiled for UK banks

The government has announced that it will inject up to £37bn of taxpayers money into Royal Bank of Scotland (RBS) Lloyds TSB and HBOS. RBS is to raise £20bn with a further £17bn being put into the HBOS and Lloyds TSB. On the brighter side of things Barclays is to raise £6.5bn without any government help.

These bail out plans mean that they taxpayers will own around 60% of RBS and 40% of the newly merged Lloyds TSB and HBOS. Both of these banks chief executives and chairmen are to resign after they have asked for the bail-out money. This cash is part of the money that the government pledged last week in a rescue plan that aims to stabilise the financial market.

These announcements can be seen as some of the biggest days in banking and is a humiliation for the countries top banks. The government are putting more and more money into these banks in order to try and help the economy. What are your views on this? Let me know.

UK treasury in talks with Iceland

There is a party of officials who are visiting Iceland today to discuss the banking crisis and the impact that this is going to have on UK depositors. After some very heated discussions between the Icelandic and UK leaders; has lead to the meeting happening.

The UK government are very keen to ensure that the £1bn that has been invested in Icelandic banks is secure and that it can be recovered quickly. A lot of local councils and public bodies have used Icelandic banks to deposit there money.

Whilst over there they are also keen to find out what the situation is for UK individuals who are currently in the unknown. However, the turmoil that currently exists within the Icelandic market means that they are highly unlucky to give any reassurances about foreign deposits.

Time will tell to see if peoples deposits will be returned and let’s hope that the meetings that are taken place will lead to some positive results in such a difficult time.

A glimpse of light as some shares increase

After the news that interest rates had been cut by 0.5% shares have mainly increased in Asian and European businesses. The UK’s FTSE 100 saw an increase by 1.3% as banking shares helped push them up. In France the Cac 40 rose by 2% and in Germany the Dax increased by 0.5%.

There was also a rise in financial shares as HBOS was up by 30% and the Royal Bank of Scotland added 15%. However, Japans Nikkei index closed lower after the prime minister had urged more action to try and boost the countries economy.

However, there is still an awful lot of work that needs to be done to try and stop the country fallen into a recession. We all hope that this small glimpse of light will help the economy turn around although I am sure there are still some tough times ahead. Let us know your views on these issues.

Government to help UK Banks

The UK government has today announced that they are going to put a package in place to help the UK banking system. The total amount of help that the government are providing could rack up to a staggering £500 billion. The first part of the plan will see extra capital become available for 8 of the UK’s largest banks. In return the government will get preference shares in the banks. Prime Minister Gordon Brown has said that he hopes this backing will put the UK banking system in a stronger position.

However, as the news was announced the FTSE 100 in London fell by 4%. Some banks have seen their shares rise dramatically after the news whereas others have still continued to see a fall. Some of the key measures within the plan include:

Banks will have to increase their capital by £25bn and can borrow from the government to do this.

A further £25bn capital will be available but for an exchange of preference shares.

Those banks that want to participate will have to sign an FSA agreement which looks at executive pay and dividends.

Today’s measure will see £1,600 of each taxpayer going towards this scheme. Let me know your views on today’s actions.

Banks Share prices fall

I haven’t written an article for a few days as I have been following the situation with the current economical crisis. I was hoping that I would be able to come back and write an article telling you that the situation was improving, however – no such luck.

It has been an extremely turbulent time once again for banks as they have seen there share prices fall sharply today. There is lots of rumours suggesting that this is due to a meeting that was held between bank chiefs and the chancellor Alistair Darling to discuss fundraising. The meeting was called to try and come up with a rescue bank especially as many foreign banks are pledging that all of their customer’s money is safe and not just up to £50,000 as UK banks have agreed. This is causing a lot of people to look at putting there money with a bank outside of the UK who is promising that all of there clients money is safe.

The economical crisis just seems to be getting worse and with the government trying to deny that the country is going into a recession no-one knows what is going. It is simply going to have to be the case that people try as best they can to weather the storm and come out of it at the end.

Confirmation of Bradford & Bingley to be nationalised

The credit crunch has taken its next victim, Bradford and Bingley (B&B). The government has today confirmed that the bank Bradford & Bingley has been nationalised. The government is to take control of the banks £50bn mortgages and loans. However, all of the branches and savings units will be bought by the Spanish owned Santander.

All savings account holders are protected under the move and taxpayers are supposedly being shielded from any losses. With B&B the latest bank to be effected so severely by the credit crunch it raises the question as to who could be the next bank to be effected by such turbulent times in the financial market. In a statement by the prime minister, Gordon Brown has said that the government will do anything it could to try and help the UK financial system. Lets help he can do something dramatic to turn things around. Let us know your views on the matter.

France appears to be weathering the credit storm

It has emerged today that France appears to be weathering the credit storm and in an interview with a once London banker who has moved to France he explains why he believes this is.

He explains how people in London are keen to use up all of the money that they have and explains how an ex colleague got a very nice bonus so he went out immediately to buy a new car. He goes onto explain how most people in France only spend what they make in a years income and therefore spending is not fuelled by credit as it is in USA and UK. Banking rules are also different in France and Credit Cards are more like debit cards. If someone went to purchase an expensive item but didn’t have the funds in their account than the bank would be alerted and wouldn’t allow the transaction to go through. This way it means that people do not spend money that they do not have.

It was also claimed that if you are wanting to purchase a house in France you will have to have a big deposit as people can only borrow one third of there annual income.

Irish economy falls into recession

After shrinking for a second quarter in succession the Irish Republics economy has fallen into a recession. As recession is measured by two negative quarters of growth and this is what has happened in Ireland according to the Central Statistics Office.

The economy had shrunk by 0.3% in the first quarter and shrunk by a further 0.5% in the three months to the end of June. This is the first time that Ireland has fallen into a recession since 1983. The economy is now facing its toughest challenges since the 1980’s when it was hit with high unemployment and emigration.

Economists have pointed the blame towards the collapse of a decade-long bonanza in the property market and to add to this a slump in the activity in the construction industry.

The global credit crunch has also been a major factor in the slow down in the Irish economy. This means that Ireland is the first country in the eurozone to fall into a recession.

FBI probe key finance firms

An investigation has begun by the FBI looking at four major US financial institutions which are caught up in the current financial crisis which is affecting the world.

They are investigating possible fraud by Fannie Mae and Freddie Mac, the failed bank Lehman Brothers and insurer AIG. Top managers at those firms are also being investigated the report today revealed.

In the past year the FBI have began an enquiry across the entire financial market after the US housing market slumped dramatically. It was initiated by the way high risk mortgages were being sold. It was looking at lenders that were selling home loans to buyers with low or unpredicted income and also the investment banks that packaged these loans and sold them on. Turbulent times have shattered the financial market across many countries and investigations like these will no doubt pop up in the future.

Government pledge action to help economy

The chancellor Alistair Darling has pledged to help the turbulence that currently exists within the financial market in a speech he made today at the labour conference. He admitted that the UK was going trough some difficult times with the economy but has said that he remains confident that the economy will recover from the downturn stronger than what is was before it went into it.

His speech was focused on his main priority to stabilise the banking system and with this would hope to see the economy start to rebuild itself. There was clear to see that the government had finally admitted that there was a crisis and that there were some big economic challenges ahead. However, he believed that with the party they could help the UK get out of the current troubles.

The government admitted that they would have to spend within there means but many people are worried that this could mean an increase in income tax although the chancellor would not comment on the issue. Therefore there is a strong likelihood that this will mean that there will be a rise in income tax.

HBOS and Llyods TSB to merge

Llyods TSB has today revealed its plan for an expected takeover of £12.2bn of HBOS and has labelled the takeover as a unique opportunity. It allows the financial firm to increase market share and cut costs as two of the UK’s biggest financial services comes together. The takeover could see Llyods TSB making savings of £1 billion a year. However, a consequence of this is that there will be a lot of job cuts as the merger will see many departments having many people doing the same role. Llyods TSB have rubbished claims that this could be 40,000 jobs which would be a disastrous move for the people of the UK as the credit crunch kicks in.

Under normal circumstances this deal would have not be allowed to go ahead by the competition commission as it would be seen as a clear monopoly in the market. However, because of the way the economy is Alistair Darling, chancellor, said that without the move the outlook was very bleak for the economy in the UK. However, there have been claims that this was a bit of a rushed deal because of the acceptance of two of the biggest financial organisations merging.

However, this has been denied by the chancellor who has said that he has known for several weeks and the deal wasn’t just done over night. The buyout deal is actually a rescue deal with HBOS getting into trouble with their share prices fallen heavily in the past few weeks. As the credit crunch kicks in who will be its next target?

Unemployment rises as Credit Crunch kicks in

Unemployment figures have risen again by 81,000 people between May and July. It is a clear sign that the credit crunch is effecting businesses which is leading to staff cuts.

The government’s official unemployment rate increased from 5.3% to 5.5% taking the total number of people unemployed to 1.72 million. The number of people who are claiming jobseekers allowance also rose by 32,500 during this time according to the Office of National Statistics.

The overall number of people in work and the available vacancies also fell. The figures show that unemployment is starting to accelerate and it is expected to reach 2 million people in 2009.

It has also been claimed that number of people out of work for a year or more in 2009 could double. There is an emphasis on the effect that deflation is having which should be of more concern than inflation and there are calls for interest rates to be cut to try and help the problem.

Inflation creeps to 4.7%

The annual rate of UK inflation has risen in the month of August from 4.4% to 4.7%, a jump which is higher than was expected by many industry experts.

A letter to the chancellor, the Bank of England governor Mervyn King has warned that inflation could ruse to 5%. Mr King has blamed the increase in food and energy prices as a reason as to why inflation is above the government target of 2%.

The largest contributor to the rise in inflation in August was higher gas and electricity prices, with a number of large energy firms raising prices during the month. This outweighed the reduction in oil and petrol which fell by 5.5 pence per litre between July and August.

Credit Crunch hits travel companies

I thought today I would discuss how the credit crunch is hitting travel companies. I am sure many of you have been on holiday this year and are currently thinking about where you might want to go to next year. Well with the rising fuel costs it is becoming evermore apparent that airline companies are struggling. In recent weeks there have been Zoom and XL who have both suffered from the current conditions and many of XL’s customers are stuck across the world as there flights have simply been cancelled.

Today it has been revealed that Alitalia is in desperate need of support with a statement revealing that they can only afford fuel for the next few weeks with the possibility of some flights having to be cancelled as the company simply can’t afford to purchase fuel. What effect will this have on people? Well for a start it is expected that flight prices are going to rise significantly so that airlines can continue to operate. Therefore does this mean more people will stay in there own country to holiday? Let me have your views.

What will be left after the credit crunch

As the city goes through some difficult times with the financial situation that is before us it is interesting to look beyond the crunch and see what will be left. Jeff Randall, the former business editor at the BBC, has argued that reinvention is the greatest attribute that will come from the credit crunch. Although being pessimistic in the short term in the long term he was very optimistic. In the past it has shown that the city has recovered from such events and will do once again.

However, it can be said that it was invention and reinvention that has gone wrong that may well have got us into the situation that we are in today. Many companies have came forward and admitted that they wrong and that there invention and reinvention has lead to this. They even say that it was greed, excess lending, doing things that they didn’t really understand that got them into this mess and we can now see the effects of these actions. A lesson to be learnt next time is that better research and analysis of there actions should take place before they carry anything out.

Britain slip closer to recession

The European commission has today announced that they believe the UK, Spain and Germany will all fall into recession in 2008. Brussels said that the three countries would see two negative quarters in a row and that is what is technically defined as a recession.

In the latest economic forecast the commission also downgraded its outlook for eurozone, which doesn’t include the UK, growth again. The 15 nation group will only grow by 1.3% this year compared to projections of 1.7%. The 15 nation group also saw its economy shrink by 0.2% between April and June for the first time ever since it started in 1999. That was blamed in a reduced number of exports and a reduction in customer spending.

There is a gloomy outlook for all of the countries and the UK is no different. With the slump in house prices and very volatile financial markets the European commission believe that the UK economy will decline by an annual rate of 0.2% in the next two financial quarters.

Credit Crunch to “last into 2010”

The UK’s largest mortgage provider has today said that they believe the credit crunch will last well into 2010.

Andy Hornby, HBOS Chief, said it would take 18 months before the US house prices started to rise again. That is what is needed for banks to gain confidence and start lending again. It was suggested that there was little the UK government could do to stimulate the markets and that it would be a waiting game for the market to turnaround.

Hornby stated that British banks would struggle to offer bank loans until they could raise significant sums on wholesale financial markets. Around two – thirds of wholesale funding by British banks came from the US so until the problem gets better over there the UK will be in a rut.

Confidence is weak at the moment for UK banks and therefore there is a great concern for the lending of money.

House prices fall by double digits

UK house prices recorded an annual fall of 10.9% in August – the first double digit drop since 1983 says Halifax. The lender said that house prices dropped by 1.8% in August compared to July, leaving the cost of an average home in the UK at £174.178.

It said that market conditions would remain “challenging” in the coming months even after the support offered by the government. House prices on a whole dropped throughout the UK but some surveys indicated that Scotland was more resilient.

The figures show that the average price of a house in August 2008 is the same as it was in February 2006. It certainly looks like more government initiatives are needed to help stabilise the housing market within the UK.

UK to plunge into Recession this year

The Organisation for Economic Cooperation and Development (OECD) believes the UK will fall into a recession this year.

They believe that the UK economy will shrink at an annual rate of 0.3% in the third quarter and by 0.4% in the final quarter. According to the latest official figures the UK economy did not grow at all in the second quarter.

For the economy to be declared as in a recession there has to be two quarters worth of negative growth and the gloomy outlook for the UK economy has pushed the Sterling to its lowest levels for two years against the euro.

Chancellor Alistair Darling said many leading economies were suffering from slowing growth and that the UK could “get through” a difficult period with the right policies in place.

The OECD sees the still unfolding downturn in the housing market as one of the major problems for western countries. To add to this the reduced amount of credit supply is not helping things. Although news today has suggested that the government may be considering reducing interest rates to try and encourage spending which will hopefully help turn the market around.

Credit Union Boom

It has emerged today that credit unions are booming at the moment as people are being denied loans and mortgages at banks. People are being regularly turned down so have now turned to credit unions to help them out. Banks are simply tightening their lending rules which prevent people from gaining access to funds that they so desperately need.

Credit unions are a life line for some people. A couple of weeks ago a case arised where somebody was paying back a loan and had an annual rate of interest of 1430%. They went to the credit union and were helped out.

Credit Unions are also helping small businesses with their finances. A lot of new companies will not get the support of their banks during this time and are therefore turning to credit unions that are helping them finance ideas and their running.

Stamp duty axed on properties less than £175,000

In a bid to help the housing market the government has axed stamp duty on any property costing less than £175,000 for 1 year. The amount that the 1% purchase tax has to be paid is being increased from £125,000 from Wednesday morning.

Someone buying a house for £175,000 will save £1750 which helps ease the financial woes of buying a residential property at this time. The government estimate that over 50% of house buyers will now be exempt from this duty and is there way of trying to support the housing market.

The move by the government has been supported from some of the biggest lenders. With house prices falling at the fastest rate since 1996 it is important that the government have put in measures to help those people that are planning to move at such a financially uncertain time.

Stamp duty axed on properties less than £175,000

In a bid to help the housing market the government has axed stamp duty on any property costing less than £175,000 for 1 year. The amount that the 1% purchase tax has to be paid is being increased from £125,000 from Wednesday morning.

Someone buying a house for £175,000 will save £1750 which helps ease the financial woes of buying a residential property at this time. The government estimate that over 50% of house buyers will now be exempt from this duty and is there way of trying to support the housing market.

The move by the government has been supported from some of the biggest lenders. With house prices falling at the fastest rate since 1996 it is important that the government have put in measures to help those people that are planning to move at such a financially uncertain time.

Manufacturing Jobs now at “Risk”

The Engineering Employers Federation (EEF) has today said that the government must face the economic downturn head on if it is to reduce the impact of manufacturing jobs.

The EEF made the statement after carrying out a survey of over 800 companies who suggested that job losses were being predicted across the UK.

There has been a sharp decline in expectations over the months ahead which could lead to companies making staff redundant.

The government responded by suggesting that it understood the problems that manufacturing companies are facing and are looking at ways of supporting the companies through these difficult times.

The study revealed that only companies in London and the South East would actually recruit new staff in the coming months. The government is currently working with local companies and agencies to try and help combat the problem and to try and help companies in the difficult times ahead.

Bradford & Bingley announce losses

In the midst of the credit crunch it is not positive to see Bradford & Bingley, a buy-to-let loans specialist, has reported a loss for the six months up to 30th June.

B&B made a loss of £26.7m compared to the profit that they made against a £180.4m profit the previous year. Due to the circumstances it is not a surprise that they have made a loss but it is quite worrying to see the extent of this loss.

The conditions mean that it is harder to get access to credit and therefore people may struggle when it comes to purchasing property.

Looking to the future B&B have said that they would reduce the volume of buy-to-let mortgages until the market becomes more favourable. Therefore, for the time being people may find it difficult to get there hands on a buy-to-let loan.

House prices fall by 10.5% in one year

The latest survey from the Nationwide has found that house prices have fallen by 10.5% in the last year. This is the first time since 1990 that there has been a double digit fall.

The average price of a home has fallen by £19,000 in the last year and indicates worrying times for people who are looking to sell their house.

The market is likely to stay subdued according to Nationwide after gloomy forecasts expressed by builders. The survey showed that house prices have fallen for the past 10 months in a row and are at their lowest level since early 2006.

House builders were pointing to a lack of consumer confidence which was encouraging the fall. To add to this mortgage lending is continuing to fall with a lot more people being refused mortgages because of the uncertainty within the market.

Mortgage lending “levels off” in UK

Major banks mortgage lending has levelled off in July but the amount borrowed for day-to-day spending slowed according to today’s figures.

The amount lent for mortgages in July rose by £4.3bn, which was the same amount as in June according to the British Bankers Association (BBA).

However, there was a prompt warning about predicting a housing market recovery as there was still only a low number of mortgage approvals. The overall rise in consumer credit rose by £0.1bn which is down from £0.3bn in June.

The overall number of approvals for house purchases increased marginally in July from June but is still 65% lower than the same time last year.

It is still too early to suggest that the housing market is starting to recover but let’s hope approvals continue to grow in the coming months.

Insolvency figures reduced

Today has seen the surprise news that individual insolvency has decreased in the last quarter. The total number of individual insolvencies in England and Wales was down by 2% to 24,553. It was also 8.3% below the figure at the same time in 2007.

It may be that less people are wanting to get into debt due to the credit crunch and banks are also less keen to offer credit as they are unsure of what the economy will pan out like.

However, company liquidations were up by 11.6% on the previous quarter to 3,560.

‘Surprised’

The results came as a surprise to analysts as they believed that there would be a slight rise in the figures.

However, it is still expected that the number of individual insolvencies will increase over the next 12 months.

Provisional figures for Scotland are a lot more gloomy showing that individual insolvencies could rise to 4,735 in the second quarter of 2008. This is a 45% rise on the previous three months and 36% up on the same period a year ago.

Credit Crunch still getting worse

The International Monetary Fund (IMF) has indicated that the credit crunch shows no sign of getting better. They have said that the fall in house prices and the slowing economic growth is hitting credit available to people.

They highlighted that banks are under more pressure and further cutbacks could lead to the slowdown getting worse.

It was also claimed that growing markets like China would be impacted by the credit crunch eventually.
The longer the credit crunch goes on the more effect it will have on people so lets hope the economy will turn around and hope the outlook will be bright.

Camping Prospers as Credit Crunch kicks in

The BBC today has claimed that the Camping industry in Wales is flourishing with the effects of the credit crunch.

As families tighten their belts they can’t afford to go abroad and spend lots of money on a holiday so are opting for a cheaper alternative in camping. Instead of costing a family thousands they can have a weeks family camping for as little as £105.

Welsh camping sites have said that they have healthy bookings for the summer season and camping equipment is blooming. Dave Beynon, of Three Cliffs Bay Holiday Park on the Gower, said that he was turning away 100 customers a day as there is simply not any room left on the campsite.

Another campsite manager suggested that they have 60 per cent more campers this year than last and this has been put down to the credit crunch.

So why not pick up your tent, grab your sandals and head down to your local campsite for a fun, friendly and cheap holiday.

The rules of the credit union to be reformed

The government are to bring new measures in next year to strengthen the finances of credit unions.

The measures look at allowing credit unions to broaden their membership and pay interest on members’ deposits.

Credit unions typically serve people on low incomes and are small-scale savings and loan co-operatives.

There are about 600,000 members in the Great Britain between 535 credit unions.

It is the believed the government wants to help credit unions expand so that people in financial difficulty do not go to loan sharks.

Some of the proposed changes are highlighted below:
• Credit unions will be able to charge for their services i.e. the issuing of cheque
books.
• Groups of people will be able to join and not just individuals.
• Interest will be paid on savings, which should attract more people to use credit unions.

Credit crunch not effecting businesses spending on IT

Businesses are seemingly not being affected as badly as first thought by the credit crunch as they continue to spend on IT.

The number of UK technology suppliers issuing warnings on their profits as halved in the second three months compared to the previous three months. However, other companies such as housing and finance are struggling with the challenges faced by the credit crunch.

UK suppliers of IT software, hardware and equipment issued 12 profit warnings in the second three months of the year compared to 20 in the first three months.

IT suppliers seem to have been helped by the fact that a lot of large firms are half way through long term IT projects which could take a number of years to complete. Similarly IT investments are seen as business critical by small companies. It is clear to see that the credit crunch is not affecting IT organisations as badly as other industries.

North firms value wiped by £20bn

More than £20bn has been wiped off the value of the North East’s top 40 companies in the last year. This reflects the effect that the credit crunch is having on our region.

An approximate total market capitalisation fell from £92.15bn to £69.7bn in June this year. This would show a deterioration of 24.3% and is a clear indication of the effect that the credit crunch is having in the North East.

There were just five companies in the North East that have shown a positive share price return in the six-month period. These are mostly made up of manufacturing companies or work in the oil and gas or energy sectors.

It is certainly now clear that the credit crunch is going to have a major effect on local businesses and there is no more important time to stick together as a region and get through the potential difficult times ahead.

Forecast Gloomy for UK economy

The outlook for the UK economy next year is looking gloomy as businesses begin to lose confidence. Due to risen living costs it is expected that growth will be no more than 1% in 2009 according to the Ernst and Young item club.

Confidence among employers has also fallen to its lowest levels since 1996 according to the Institute of directors.

Recent studies have shown that within the next year it’s heavily likely that the UK economy could fall into a recession.

House prices are expected to fall by 10% this year and by 6% in 2009. That will cause concern for homeowners and alike.

However, there is still some good news in that businesses still expect to take people on next year and most organisations also believe that profits will be higher this year than last.

Time will tell to see how the UK economy will pan out.

Pocket Money is hit by Credit Crunch

The credit crunch has led to the reduction in children’s pocket money as parents tighten their belts. Parents are using their savings and have had to cut pocket money due to rising bills two surveys have reported today.

A survey of 1050 people found that 14% of them had used their savings to pay for food and 12% had settled their mortgage or rental payments by dipping into their savings.

7 out of the 10 people asked suggested that they thought they would be paying more money on food, bills and petrol within the next 3 months.

17-year-olds have been the hardest hit this summer with them finding the biggest dent in their pocket as ‘the bank of mum and dad’ simply cant afford to give them any more money.

Credit Crunch not as sharp as initially feared

The International Monetary Fund (IMF) has announced that the global slowdown which is a direct result of the credit crunch is not as bad as first feared. The global economy is expected to grow by 4.1% in 2008 against a forecast in April which stated 3.7%. However, this is still less than the 5% growth achieved in 2007.

Although this is a slight improvement the IMF stated that the global economy was still in a “tough spot”.

The first quarter slowdown was a lot less sharp than was predicted. Looking at the UK economy it is expected to grow by 1.8% in 2008 and 1.7% in 2009. People and businesses should still be wary of their financial situations but lets hope this is a sign of better times to come for the economy.

Job Losses in the North

More than 400 staff are just about to get fired after another bank from the USA has decided to shut its mortgage business.

Future Mortgages call centre in Doxford Park, Sunderland is next up for the chop.

The owners, Citigroup are shutting down Future Mortgages and CitiFinancial loans and have both now stopped lending.

So that makes 400 call centre staff redundant from the call centre and 270 more from their branches in the UK.

Here comes the crunch.....

Insolvencies in England and Wales are up, now there is a surprise.

Over 25,000 in the last three months, up over 1.5% on the last quarter when are creditors going to learn.

Speaking to credit managers daily it seems they are only just waking up to the fact that they MUST tighten limits and lending now to nip the crunch off in the bud but still I see reckless lending policies and credit limit setting, poor verification of a customers details and a fear that if they come down too hard they will loose business.

Wakey wakey !!!!

Tighten up those limits now. You're lending to people the banks won't touch.

Crunching Fraud

The number of bank accounts being taken over has risen

CIFA the UK fraud prevention service says that fraudsters have changed due to the credit crunch.

Their work shows that more people have been lying on their applications for credit and loans in an attempt to cover up a poor credit history.

Fraud cases have increased by 10% in the first quarter of this year.

Don't believe everything you read........especially on an application form.

Banking on credit ?

The Bank of England think that the losses from the current credit crisis could be overstated but at the same time have said that the worry of an impending financial meltdown might however become a self-fulfilling prophecy!

Well that's a comfort isn't it !

The Bank of England thinks that the worries are exaggerated, commenting that the credit markets "are likely to overstate significantly the losses that will ultimately be felt by the financial system and the economy as a whole".

"It will exaggerate to an even greater extent the potential damage to the real economy."

Interestingly, the LSE said that the bak's report might mean that the worst of the "crisis" was over but didn't give much reassurance as they then also went on to say "We now may be just moving into straight forward economic recession".

Is this some high level sitting on the fence? I think so. We're seeing the effects of consumer indebtedness and increased costs of borrowing translate to much higher levels of corporate debt. Don't get bitten or become complacent !

Charging Orders

So having seen the crunch biting some time ago we're now seeing it starting to filter through to the sharp end.

The number of creditors who have now sought a "Charging Order" has risen dramatically.

131,644 orders were made in 2007, that's a 42% rise on the previous year.

This is a fairly dramatic rise and a clear sign that savvy creditors are getting wise to over burdened debtors and taking steps to secure the debt after judgment.

Even more alarming is that the growth in Charging Orders in the last two years is now very close to 100%.

If you are owed money, you need to get ahead of the crowd or get left behind. Debt is building and it affects everyone who grants any form of credit.

Enforce and Charge

Just to demonstrate how enforcement of debts is a great indicator as to the mood of the nation's credit managers (and their commitment to making sure they get paid, I pulled some stats from the Council of Mortgage Lenders website today.

As disposable income is harder to get your hands on and court judgments become more difficult to get paid quickly, smart claimants get their lawyers on to enforce their judgments by charging order, like a mortgage securing a debt.

Take a look at how the orders granted statistic has grown over the last seven years and answers on a postcard what the 2008 figure might be !

Year Applications Made Orders Granted


2000 15,593 9,207
2001 21,502 15,280
2002 30,358 21,171
2003 34,648 24,796
2004 45,191 32,953
2005 65,305 48,812
2006 92,511 66,473
2007 131,644 97,017

Make sure you get those judgments secured for long term payment (which incidentally makes you a secured creditor if the debtor becomes insolvent).

Talk to BACK inContact today about getting your old judgments reviewed, it may just pay off.

Repossessions on the way back ?

I see that the housing charity Shelter have said that their figures showed that the number of borrowers in financial difficulty has grown by an incredible 700% !

The FSA (Financial Services Authority) is also saying that home repossessions are likely to rise across the UK by 50% in 2008.

More stats, more trends all showing the credit crunch is getting closer to the average man in the street or local business every day.

Bankruptcies Heading Up

New figures have shown that the number of people becoming bankrupt in Wales has doubled in six years.

Apparently, in the year 2000 just over 1,000 bankruptcy orders were made in Wales.

Figures up to the end of 2006 show that there have been in excess of 2,000 bankruptcies.

The Welsh Centre for Credit Counselling has seen debt inquiries grown from 1,000 a year to 6,000 in 2007.

If this trend continues across the UK standby for trouble. Remember, he who shouts loudest gets paid first, take action, NOW.

UBS sub-prime writedown.....again

You might remeber reading thatUBS had warned that 2008 would be a tough year.
Well today they said that their writedowns due to sub-prime have rocketed to £18.5bn, wow.

This has to be about the biggest write off by any bank since this whole credit crunch started.

Surpise surpise UBS also said that the chairman and former CEO Marcel Ospel would not be seeking re-appointment.

So this works out as almost $19bn of write offs on top of the $18.4bn it wrote off in 2007, as the value of its assets has plummeted.

They are now trying to raise 15bn Swiss francsby issuing new shares.

Bumper Repo

Repossessions are up 21% last year so anyone who thinks the crunch isn't creeping closer to home, wake up.

This is the biggest total since 1999 and bear in mind that in 2003 it was just over 8,500.

Worryingly, arrears rent up by over 8.5%on the previous year too so more misery seems to be on it's way.

The figures are much better than during the 90's but could get worse as some mortgage lenders have failed to confirm if they would reflect the latest cut in interest rates to their borrowers.

Bankruptcy orders were also up last year by almost 2.5% although IVA's and Winding Up's have dipped slightly.

Down Down Deeper and Down

New mortgage approvals have dropped to the lowest monetary value we have seen in over two and a half years. Given that only 42,088 new loans were approved last month this is the worst since records began in 1997.

The worrying thing is that even though property prices were about 5% across 2007 the prices actually fell in the last quarter.

I suspect rates need to come down by two more quarter point increments if we want to see this start to change ion any sustained way and I'll be interested to see business borrowing figures next month to see how it is biting into the supply chain.

My bet is for a February or March .25% cut and then another in June or July, watch this space.

Don't Panic Captain Mainwairing !

The Bank of England has just voted 8-1 for a hold in interest rates, at least someone isn't panicing like the Fed !

Smart money would be on a .25% drop again next month and that's where my money would go as they have commented that the risk of higher inflation has "worsened markedly" and even Mervyn King mentioned this in his speech last night.

Energy costs must be pressing on inflation as well as some pay settlements (except the Police) and it seems likely a small cut will be needed to keep things ticking along.

Slashing Away

The Fed has chopped interest rates to 3.5% lopping a massive 0.75% off their rates, why?

Well, they seem to think by not doing so the USA will drop into .......recession.

I have seen a comment from one banking guru who claims that this move is "obvious panic" and it's difficult to argue against that.

Stock markets are looking extremely volatile right now and despite closing back up on the day it's easy to see how the FTSE could easily take a second hit after early trading losses. There seem to be a lot of jittery dealers and this is now getting very close to home, starting to cause a few flutters in some major UK multiples I will bet. It's coming, just make sure you have your house in order with bank borrowings and debtor ledgers, remember, the survival of the fittest.

Strike Two

Bank of America has now joined the club of big losers by announcing a 95% fall in profits for Q4 ! They put it down to...guess what ? rising credit losses.

Their net income dropped to$268m in Q4 when it was a whopping $5.26bn for the same period in 2006. Wachovia another US bank has also announced an incredible 98% drop in their Q4 profits.

Bank of America has had to provide $1.74bn to cover credit losses.

Recession? Don't be silly, Gordon Brown and George Bush say there isn't, so that must be right, mustn't it?

Getting Close to Home

So having said yesterday to watch out for something closer to home, here are.

This morning, Scottish Equitable have closed the exits on some of their funds because of a rush to withdraw cash from its commercial property funds. They have now introduced a 12 month delay to get your money back.

The fund managers are already blaming the rush to the exits on worries about US sub-prime mortgages, the threat of recession and interest rates.

Friends Provident did just the same in December.

Because it can take a while to realise assets the amount of withdrawals has got to the point where they need to sell off buildings just to raise enough money to make the payouts.

The crunch is creeping closer.....

How long is it going to be before a corporate b2b organisation starts increasing their prices due to credit squeezes ?Not long I will wager.

Wow, what a crunch !

After I posted details of the Citigroup loss, who could have seen this coming.

Merrill Lynch has reported a loss for 2007 of $7.8bn for the last 12 months.

It is the company's second quarter's loss on the bounce now and it cost the previous chief executive his job.

Watch out for more losses closer to home shortly.

Using low cost legal services

Andrew Lynch of Metro tells of his experience using BACK inContact's low cost legal services, recovering over £40,000 in under 2 weeks with £2,000 interest and NO LEGAL BILLS !

Metro Outlook - VODCast 1

Metro Legal Advisor Andrew Lynch talks to the BACK inContact team about his role and some of the challenges they face.

Staggering

Just when you thought the crunch might not be real, look at this for a hit. Citigroup had to announce a loss due to the credit situation totalling an incredible $18.1bn which the Chief executive had to describe as "clearly unacceptable". This loss was apparently down to over exposure to bad mortgage debts.

Citigroup also commented that their revenues fell by around 70% in Q4.

Citigroup is set to receive a cash injection of $6.88bn from the Singapore government investment agency GIC and it was only recently that the Kuwait Investment Authority said it had bought a $3bn stake in the bank. Just last November, the Abu Dhabi Investment Authority made an investment of $7.5bn.

This big hitting bank has cutting its dividend for the quarter by 41%, from 54 cents to 32 per share, as well as bringing in a further $14.5bn by selling securities (which includes the investment from GIC).

Citigroup isn’t the only one being clobbered by bad debt but their provision for bad debt is by miles the biggest so far.

Let’s look at what the rest have been hit for:

Citigroup: $18bn
UBS: $13.5bn
Morgan Stanley $9.4bn
Merrill Lynch: $8bn
HSBC: $3.4bn
Bear Stearns: $3.2bn
Deutsche Bank: $3.2bn
Bank of America: $3bn
Barclays: $2.6bn
Royal Bank of Scotland: $2.6bn
Freddie Mac: $2bn
Credit Suisse: $1bn
Wachovia: $1.1bn
IKB: $2.6bn
Paribas: $439m

It could be coming to a bank near you soon if it hasn’t already and squeezing your rates up to pay for someone else’s mess ups.

Get your credit book in shape soon !

Eur going to love this.....

The Irish credit market is set for a revolution.

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Collections letters for FREE

Businesses of all sizes based anywhere in Ireland can now have their debt recovery letters sent by the BACK inContact law firm partner for Ireland for absolutely no cost. Using pan European Late Payment legislation all business to business collections letters are FREE and all other collections letters are just €9.99 plus tax.

Incredible Service

To make this incredible service available, Entrepreneurs Barry Kemp and Andrew Charlton’s BACK inContact have appointed Limerick based Dermot G O’Donovan Solicitors as their exclusive partner for Ireland.

The Irish market has long since been on a high as the Celtic Tiger rode the crest of a property wave but with the economy stagnating and the credit crunch biting customers are demanding much more than law firms have been willing to give, now, all that changes.

Simply Unrivalled

By harnessing technology and making efficiencies within a traditionally labour intensive market BACK inContact and Dermot G O’Donovan are able to offer a service that is simply unrivalled within the Irish market.

BACK inContact (Ireland) is lead by renowned legal management consultant Anne Neary in partnership with Barry Kemp and Andrew Charlton who created and implemented this business model in the UK. Anne’s expertise in the Irish legal market and BACK inContact’s automation and vision give this exciting project an amazing team.

"With BACK inContact we are offering levels of service ranging from completely free for Late Payment Compensation based claims to fixed price €9.99 for pre-legal letters. Where else in Ireland can you get these prices whilst still receiving a top level service?"

Andrew Charlton commented “Dermot G O’Donovan stood out from the pack during the partner selection phase we conducted and in our opinion are the most progressive and proactive legal firm we have seen in Ireland.

Adrian Frawley is the managing partner at Dermot G O’Donovan and added:

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Since its launch in 2007 BACK inContact has attracted thousands of clients with more joining daily. To join the credit revolution and change the way you work with your collectors log on to http://www.backincontact.com/ or read our credit blog “Give me credit” by going to http://backincontact.blogspot.com/.

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Crunch is going to SQUEEEEZE you harder

I see this week that the US Federal Reserve has said that the prospects for the economy in the USA have worsened for 2008.

The Federal Reserve Bank has reduced their rates three times since mid 2007 and they are now at the lowest level in two years.

During his speech on Thursday the Fed announced that they may take substantive additional action to try and support growth and also to reduce the “downside risks".

US stocks have responded positively as the Dow Jones industrial average climbed by almost 1% and the NASDAQ rose by just over half of a percent.

Mr Bernanke said that the facts he had suggested "that the baseline for real activity in 2008 has worsened and the downside risks to growth have become more pronounced".

The US is facing a major challenge in dealing with both a diminishing housing market and rising inflation as oil and food prices rise.

Mr Bernanke also explained that the issues with the slowing housing market and in particular the sub-prime mortgage crisis, was having on the wider economy.

Banks must write off billions of dollars of investments linked yet again to sub-prime debt and went on to say that the financial situation "remains fragile, and many markets remain impaired", explaining that saying that major banks are still exposed to the credit crunch.

This week Merrill Lynch said the US had already entered a recession and even Goldman Sachs suggested it is heading in that direction.

Anyone who thinks the worst is past could be in for a shock and it’s imperative to shape up before the credit crunch squeezes you.

Where did this crunch come from ?

This credit crisis started when US mortgage companies made hundreds of billions of dollars of loans to individuals that had less than perfect credit histories, this is often called subprime lending.

These debts are often then bundled together into a portfolio and then sold to on to other financial institutions in different countries often, who then in turn flogged the debts to pension funds, sometimes, even for more than the book value!

Nobody really knows who is holding some of these duff loan portfolios and until we do many banks are reluctant to lend to each other, and investors then become wary about the general state of institutions in the financial sector.

CRUNCH !!!

Credit Crunch? What Credit Crunch?

Sitting in the UK in the accounts department of an SME you might be wondering what on earth the credit crunch has got to do with you. After all, this is all to do with US mortgages isn’t it?

Well, in the same way that small acorns can grow into mighty oaks, it seeks that mighty oaks can come tumbling down if it is overburdened with small acorns.

The economic problems faced by Americans today, in their personal and professional lives are starting to spill over into Britain. The long story (about how it all came about) is one for the economist, however, its sufficient to say that interest rates and fuel costs are rising sharply on a global basis and putting the squeeze on you and I.

However, it’s also affecting your debtors. Debtors are facing the same pressures that you are and the rapid rise in house prices and commercial lending rates are hurting debtors.

So that’s a microscopic look at the credit crunch. The harsh reality is that he who shouts loudest gets paid first, so don’t let credit terms drift or extend credit without checking out your customers first. You are often lending them money for your supplies when the bank wouldn’t!

Debt problems are spreading far and wide; both companies and individuals need to take stock and protect themselves from this epidemic of the credit crunch. To provide a service on the basis of unproven creditworthiness to a client is an incredibly risky business in the current climate.

This is where BACK inContact can help:-

We offer an extensive credit checking service to provide our clients with knowledge not guesswork.

We have expert advice on hand to help you manage your finances effectively and we can help provide you with an effective credit control procedure individually tailored to meet your needs.

If you have a tricky to collect invoice, at any stage in the process from just due to seriously overdue call us today. We can help and take away the hassle. The best bit is, it might even be free. Check out our web site to see how, www.backincontact.com.