Eurozone heads for third recession, UK gets off lighter than expected
More bad news was in store for ailing EU nations as figures looked like it was due to head into the third recession in two years. With serious questions now being asked about the feasibility of keeping Greece in the EU, and whether Spain & Portugal would quickly follow if they departed, the euphoria of the Olympics has quickly given way to the grim erality of the glocal economy and we're back to earth with a bump. Or crash, might perhaps be a better analogy.
However, there's a ray of sunshine in the economic storm for the UK, the quarterly figures show that the country is still fimly in double-dp fertilizer, but not quite as deep as we first thought with the GDP being revised upwards. So we're still failing, but not quite as badly as we thought . . . which although sounds like cold comfort is more than can be said for other countries who are facing a much bleaker situation.
Funding for Lending scheme gets the go ahead
The bank of England has launched the new scheme today to enable banks to borrow money at a lower rate enabling them to lend more money to small businesses and homeowners.
This news will be welcomed by people wanting to buy a new home as mortgage rates should now drop and the level of acceptance should increase. However this has been met with some scepticism due to some mortgage lenders only reducing these rates for people that have a large amount of capital to put down as a deposit.
It is the hope that the FLS can inject some much needed impetus into the struggling housing market which saw house prices fall in again in July. House prices are now just over 2 and half percent less than they were at the same time last year. The FLS will also make it easier for businesses to borrow money at more manageable rates. Again this is designed to stimulate the economy a growth.
The FLS replaces the National Loan Guarantee scheme which itself was only launched last year but has failed to have the projected impact. This has obviously given opposition parties even more ammunition to try and discredit the Chancellor George Osbourne.
It remains to be seen what impact the new scheme will have but many households will be hoping that it’s a positive one. With many young people struggling to get on the property ladder it’s important that cheaper borrowing is made available to people that are unable to put a large deposit down. For the property market to flourish it’s hugely important to have active first time buyers, without them the chain falls down. Hopefully when the new scheme gets in to full swing the money will filter through and mortgage companies will once again be able to offer competitive rates on their 90%+ mortgages. If this does not happen then first time buyers will be stuck in the same situation and be forced to rent.
If you are a small business or someone hoping to buy a new home it’s still very important not to borrow what you can’t afford to pay back. Circumstances can change very quickly through unemployment or medical fees etc so bear this in mind when you’re signing on the dotted line.
Let’s hope that this new scheme will be something that can really kick start the economy and drag it out of recession. The whole of the UK needs some good news and a much needed boost to morale. There is still a long way to go but we have to put our trust in the politicians to get it right.