UK Economy Ready to Crash?

[Shaun @ Tru6]

I've been talking with the fellow from whom I bought my jacket and he just said something in reply to my Dollar sucks against the Pound remark:

"Very true! I think our economy is ready for a crash!!!!!!!!

Will post your jacket before this happens."

Anyone else in the UK think this is true?

[jyl]

I'm not in the UK, but from what I see, their economy has some of the same problems we do. Housing market rolling over, UK homebuilder stocks are down like 80%. Financial system under stress, they've had to nationalize a significant lender already. Oil prices hurting, even with the strong pound, along with North Sea production falling. London is heavily dependent on the financial services industry, similar to New York. Consumer spending very weak, UK retailer stocks doing badly indeed.

[Joeaksa]

Europe and the UK are being held up only by the exchange rate. The cost of oil is bankrupting the entire world save the oil producing countries.

This simply cannot last or the worlds economy and business's cannot continue like this...

[dd74]

I can tell you when I was in Spain, some felt their economy is about to fail. The concierge at the hotel told me, "Whatever you (the U.S.) does, Europe follows."

Also, the population of Venice, Italy is roughly half of what it was 10 years ago. Wages, high costs of housing and a lack of tourism has caused this.

[MFAFF]

There are two very different problems here...

1) Retail price of petrol/diesel. This is only partly related to the price of crude.. but far more a political issue as the tax rate adds its own issues. This can and may well be addressed by a reduction or freezing of the duty...its a short term solution to a longer term issue. It is also one that can be done in isolation. This reduction in duty would ease the pressure for many in day to day situations, and to be honest the reduction in tax revenue would not affect any core services (cut the rubbish pork belly spending instead....)

2) Financial Services. The 'credit crunch' is interesting. In the sector I am most familiar with the number of products on the market has dramatically reduced and so the potential pool of house purchasers has been reduced. For those with good (as in matching previous standards of credit risk) the product base is increasing ironically. The reduction in the credit risk is however not a domestic issue, its and international one as we found to our cost with Northern Rock (most of its funding came from the US). This aspect has longer term effects, but ultimately the pressure in the UK residential development will surmount this, it will be a different purchaser, thats all. The market is already thinking this way and gearing itself to respond in this fashion.

Allied to this is a hysterial surrounding 'personal' credit.. such a credit cards and loans. The issue is people being forced to live within their means, however if they can resolve thier living costs then the discretionary funding can increase again.

It would appear that the next 12-18 months may well be very tough but beyond that things begin to look less pessimistic..at least from here, tomorrow may well bring another perspective...but we are being asked to gear up for a push in that sort of time frame with money allocated to do so...so somehwere sombody is prepared enought o put money where mouth is....