Fear of double digit recession looms large in the UK, an IVA may help
By Nigel in Debt Advice Blog, Recession on 14 September 2010
Hello everyone and welcome to the latest edition of me blog. With the kids back to school, I hope a sense of normality has returned!
According to a research from GfK NOP, conducted on behalf of the European Commission, people in Britain are increasingly becoming wary of spending in the prevalent economic conditions. The fears are increasing the chances of a double-dip recession, driven by the month-on-month decline in consumer confidence.
The Consumer Confidence index has witnessed a decline for the fifth month in a row. For July it went down by three points to –22, the lowest reading of the overall figure since August 2009 when the recession was spreading its wings in the UK.
The fall in consumer confidence can to an extent be attributed to the emergency Budget the Government held in June to announce the changes it is implementing and how these would affect the consumers in the coming months. Going by the response to the budget, there seems to be more bad news for the year ahead.
Consumer confidence has long been an accurate indicator of what is in store for the economy—the present confidence level points to a spell of a double-dip recession.
The key areas in which consumers have shown less confidence include personal financial situation over the next year, condition in the general economy over the past one year as also the forecast for the economy for the next twelve months. Of these, consumer confidence was particularly low on the condition of the economy over the next one year. This clearly indicates that chances of a consumer-led recovery are low.
For personal finances, consumer confidence has gone down by four points to –6, which is six points lower than July 2009.
Though the economy registered a growth of 1.1% in the second quarter, predictions for the second quarter remain bleak, driven by the outlook of high inflation, growing unemployment levels and low growth for the rest of 2010 and possibly for 2011. Experts warn that this could lead to a second recession. The problem is further compounded by the public sector cuts and the increase in taxes set out by the government.
The survey took into consideration 2000 individuals aged 16 and over in July. The findings are further substantiated by an additional report from the European Commission, which found that the consumer confidence index for the UK dropped for the fifth month in a row to a 13 month low of –17 in July.
A natural outcome of recession is that many people find themselves in debt, something which is obvious for the number of people seeking debt advice and those declaring bankruptcy. However, declaring bankruptcy is not the only way out – opting for an IVA (Individual Voluntary Arrangement) can prove to be a better option, more so, if you have some minimum monthly income to pay as instalments to your creditors. Those in debt can seek debt advice to understand the various debt management plans available to deal with their financial problems.
