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.