Hard times ahead as UK enters recession

Closed pubs and shops are becoming a more common sight

Millions of Britons are facing financial ruin, bankruptcy and unemployment as the financial crisis bites harder. Today the Bank of England said that the UK had already entered a recession and was likely to continue well into 2009 [BBC]. The news came on the back of new figures which showed another jump in unemployment. The number of people now out of work in the UK in the three months to September jumped by 140,000 to 1.82 million, the highest in 11 years. The unemployment rate rose to 5.8%, up from 5.4% in the previous quarter, this according to official figures [BBC / Sky News].

The economic outlook has had a dramatic effect on the money markets which saw the pound dropping rapidly today against several currencies. The pound fell to around £1.50 to the dollar its lowest rate in six years. It also fell sharply against the Chinese Yuan. Latest figures show the pound being worth around 11 Yuan. The Chinese currency has gained nearly 30% in the last year against the pound despite the economic slide seen in many international markets [BBC]. The fears over recession has resulted in drops on most of the major indices. The Dow dipped sharply today, falling by 3%, as did the Nasdaq. European markets also fell. The FTSE dropped by around 1.5% while the CAC and Dax both fell by around 3% [CNN].

Despite cuts in interest rates and bank bail outs consumers are seeing little change to their own financial insecurity. Banks are still reticent to lend money and continue to impose draconian bank charges on those who exceed over-draught limits. Credit card companies have also been criticised in recent days for continuing to charge high interest rates and in some cases increasing them [BBC].

With Christmas around the corner and the retail business seeing a significant drop in custom, the knock on effect is likely to worsen as manufacturers and retailers lay off even more staff to lessen their costs. For small businesses and sole traders the future is potentially even more bleak as they struggle to pay bills, seek credit, and stay afloat while experiencing a reduced customer base.