Thursday, January 22, 2009

Repossessions rise as recession deepens

In another sign of a deepening recession it was announced today that home repossessions have risen a massive 92% in the third quarter of 2008 compared to the same period the previous year. A total of 13,161 properties were repossessed in the three month period up to September 2008 and some analysts believe the outlook is extremely bleak as more and more people fall behind with their repayments. The number of homeowners who were behind with their mortgage repayments jumped to 340,000, a rise of 24% during the year and 10% higher than in the previous quarter. Sky’s business editor said there may be upward of 75,000 repossessions in the coming year according to the Council of Mortgage Lenders, on a par with the 1991 recession [Sky News].

Whether because of people overstretching their budgets or because of sudden redundancy, the news is not encouraging. House prices are falling and many are finding themselves in negative equity. Those that are attempting to sell their home are also finding things difficult as banks and building societies become less reluctant to lend money despite government bailouts.
There was also more bad news in the manufacturing sector today. Car production in December was down by half that of 2007 and with car sales down over the year by 11.7% on the previous year’s figure the prospect of more job losses seems likely [BBC].

Today there were further job losses after the sportswear manufacturer Reebok announced it was shedding 160 staff from its Bolton factory. UK manufacturing has slowed as orders have dried up. This in turn has forced companies to make cut backs in order to stay afloat. The vicious circle is pushing the numbers of unemployed close to 2 million [BBC].

But the shedding of jobs is not only confined to the UK. In the US, technology giant Microsoft has announced it is putting 5,000 people out of work over the next 18 months [BBC]. And as technology stocks fall chip maker Intel announced it too was laying off over 6,000 staff [BBC].

Official figures due to be released tomorrow are expected to show Britain has entered recession. Most people do not need any public announcement to see that the UK economy is in dire straits.
And with top economists warning companies not to invest in Britain and saying that the pound was “finished”, the future is far from rosy. Jim Rogers, a well-known investor, speaking on Bloomberg [video / video], said "I would urge you to sell any sterling you might have...It's finished. I hate to say it, but I would not put any money in the UK." The investment guru, like many others is looking to the east. Rogers has himself moved to Singapore, and his daughters, Happy and Baby B, are learning Mandarin Chinese which he sees as the “best skill one can pass on”. But although he sees both China and India as fast emerging economies he says even they must solve some of the more physical problems of air and water pollution.

The West has long been the destination of those from Asia seeking to better their financial prospects. The tide now appears to be turning.

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