Unemployment rates set to sky rocket
Oct 20th, 2008 by ctoop
News Week: 20th October 2008
The UK is said to have plunged into a recession and that by the end of next year there could be as many as 400,000 more people unemployed. The banks have recently decided not to pass on the 0.5% cut in inflation rates to their customers.
This was bad news as it doesn’t benefit the taxpayer. As well as this, the bank’s interbank lending rate is extremely high, still meaning that the banks are unwilling to lend to each other again and get money moving around the system once more. Due to these decisions, as well as others, it appears as though the financial situation is getting worse.
Despite being asked to pay their bills sooner, the large supermarkets are now taking even longer to pay their bills, meaning that small businesses are in even more danger of collapsing. It is thought that nearly 300 small and medium sized businesses collapse every week and the supermarkets aren’t helping this situation.
More than 13 million people are employed by these businesses and if they keep shutting down, then there will be even more unemployment in the future.
Britons are spending a whopping £181million more on The National Lottery than they were six months ago. This is benefiting communities, as The Lottery has raised over £22billion for good causes. As well as creating 2,200 millionaires.
It is thought that house prices will fall an amazing 35% by next autumn; this equates to a huge £65,000 off an average house. Originally this scale of price drop was not expected until 2010. However, the economic turmoil the country is in is expected to speed up the drop in prices.
The recovery is now not predicted until 2011. These lower house prices don’t mean that houses are being snapped up. Instead, 50% fewer houses were sold in September this year than last year. It is also expected that by next year, 1.7 million people will be in negative equity meaning that the current market value of a property is less than the amount owed on mortgage still.
It is thought that there may be an increase of 2.5p per pound; this is because by 2010 the government may lose £125 billion in tax revenue. This is enough to build 4 large hospitals, however, in this current economic climate, it may not be the best time to raise taxes. It would lower the country’s moral and people would have less money to spend and get money moving around businesses and banks again.
The pound has fallen so much against the dollar that it is the biggest drop seen for 37 years. This is bad news as it means that the prices of imports will rise, such as clothes, electronic goods and holidays. It also means that fewer countries will want to trade with the UK, ultimately meaning a loss of jobs from even more people.
By Charlotte Toop
