What Will Happen In 2009?
One of the top futurists, Dr Dixon was asked to take a look at the year to come, and answer a few questions on what should be in store for us! 1. In the UK economy?
”Well, these are exceptionally tough times. We are about half way through the current crisis – this has been going on already over 18 months. So we can expect a tough 2009 and things to start picking up in 2010. Companies that make redundancies early and have saved cash will do well in the upturn: having spare cash available to buy up other companies or assets at rock bottom prices. A lot of fuss has been made about the fall in the pound but this is really good news for companies that sells goods or services outside the UK, this will also mean that people will spend more at home – whether on holidays or other things.” 2. The UK housing market! do we sell up or stay put? Should renting be a good option right now? Will housing become more affordable again?
”Each person’s circumstances are totally unique but here are some general thoughts. The market is most likely to continue to fall sharply, but will eventually bottom out. The lower the falls are, and the lower mortgage interest rates go, the more likely it is that we will see a rebound and strong recovery, as many people decide to return to the market or enter for the first time. A lot has been written about mortgage markets changing forever, but that is very unlikely. The fact is that the mortgage market will eventually settle down, and will become more attractive and competitive again. Once we become convinced we are in the early stages of a long and strong property price recovery, we will see loan to value ratios become more relaxed, and we will see a return of 90% mortgages. Home loans are the largest and most important financial transaction most people do in their lifetimes apart from personal pensions, so will become once again a very important part of retail financial services.
”Remember that the cost of selling and buying again is high due to legal fees, stamp duty and the rest. Rents have not fallen as quickly as house prices yet in many areas so renting is more expensive than you might think. Housing is already more affordable than for years – we have seen salary inflation of 3.5% or more in the last 2 -3 years, while actual property prices have also fallen up to 15%. Put them both together and you have about 25% fall in costs – and this is before the mortgage rates started to fall, already by 30% in some cases. When you look at the whole picture it’s most likely that in 6 months time we will see some wonderful bargains, with an actual cost of ownership each month of less than 50 percent of what it was just 18 months ago. But first time buyers will still need a larger deposit than in past. Remember that: most people own to live in a home and not for a 2-10 year investment. It is very important to take a long term view in all property decisions.” 3. Jon Market.. what kind of industries are most likely to make drastic job cuts? What are employment chances like now if you lose your job?
”Retail jobs will be very hard hit in January to June as reality starts to hit home. McDonalds, Lidl and some others trading at the bottom of their markets will continue to do very well. The jobs market in many sectors is surprisingly strong with 850,000 vacancies that are officially known about in December 2008. In previous downturns it has been very unusual for well motivated people to be out of work for more than a year.” 4. Credit/borrowing market! will we be able to wean ourselves off our addiction to cheap credit? Will we now think about saving more?
”These are just cycles. We are about to enter a new cheap credit boom, fuelled by the lowest borrowing costs in living memory. The result in the medium term is most likely to be another overshoot, high inflation, high interest rates, eventually leading to another crash which could happen by 2015. As we have seen – swings can happen very fast from one end to the other.”
To manage your finances over the next few months, your age, those Britons concerned about their capacity to manage their money might want to consider applying for a debt consolidation loan. By taking out such a loan, borrowers may find that they can merge various financial commitments into a lower monthly repayment.
5. World economy! what affect will the world economy has on us all? What about pound and our travel/work abroad?
”This will continue to lurch from event to event. All will be watching the price of the dollar. Despite this huge US crisis the dollar has increased or retained value against most currencies, as billions of dollars of US investments in other nations are brought back home to service debts and other priority commitments. Eventually these huge return flows will slow down. When this happens the big question is who will still want to buy dollars? Countries like China have bought over a trillion US dollars and are holding them for now. But what if they start to sell? They cannot sell too much or they will force a dollar crash and the rest of their assets will be worth much less. Although they could sell enough to force a gradual dollar decline”
Steve Smith writes for All About Loans. Visist us today to apply for cheap loans online, personal finance, and UK tenant loans.
- Steve Smith
