As we go to press with our newsletter this month, we confirm it’s now official – the UK has entered a double dip recession. The news was announced last week by the Office of National Statistics and confirmed that both the last quarter of 2011 and the first quarter of 2012 have resulted in economic contraction. There remains a great deal of uncertainty here in Britain, throughout the Euro-zone and importantly with the recent growth revisions coming out of the US. Despite concerns, as always in this environment, there are mixed messages, with recent research by Nationwide indicating that consumer confidence is in fact at a 10 month high. The feel good factor of the Olympics in just over 80 days and the tourist trade this will generate will hopefully go some way to improve the numbers. We remain concerned regarding the UK outlook but in comparison to many of our European counterparts, at this stage, in comparison, things do not look so bad. As Monty Python suggested “Always look on the bright side of life…”
Here is our round up of bright and less bright news over the last month…..
UK Returns to Recession
The UK economy has officially returned to recession, after shrinking by 0.2% in the first three months of 2012. A sharp fall in construction output was behind the surprise contraction, the Office for National Statistics said last week. A recession is defined as two consecutive quarters of contraction. The economy shrank by 0.3% in the fourth quarter of 2011.BBC economics editor Stephanie Flanders says it “adds to the picture that the economy is bumping along the bottom”. She said economic output was slightly smaller now than it was in the autumn of 2010.Last week’s announcement is an early estimate and is subject to at least two further revisions in the coming months. It is compiled using 40% of the data gathered for later revisions. The UK economy was last in recession in 2009.
Consumer confidence ‘at nine-month high’
UK consumer confidence hit a nine-month high in March, according to Nationwide Building Society. Its confidence index rose nine points from February to 53. But it was still well below the long-term average of 76. Twenty-six per cent of respondents said now would be a good time to make major purchases, which was the highest level for 10 months. The survey is in contrast to recent official figures last week, which showed the UK returning to recession in March.
Capital Fortune First National Broker To Achieve ISO9001
Last month, Capital Fortune was awarded the distinguished British Standard ISO9001 in relation to quality management systems. ISO9001 is the internationally recognised standard and applies to all processes that create and control the services a company offers. The independent audit and certification, undertaken annually, ensures that the needs and expectations of customers are fully met. This standard coupled with winning the Mortgage Finance Gazette Award for Excellence in Treating Customers Fairly now sets the national broker significantly apart from the competition. Rob Killeen, Business Manager commenting on the award stated that “Despite very tough trading conditions our Q1 figures year on year have increased a further 243% and we are confident that savvy UK consumers want value and quality. They appreciate or ‘Say It As IT IS’ philosophy and our ISO 9001 certification shows our absolute commitment to quality, customers, and our ongoing willingness to improve our offering.”
£1m house sales fall
The number of properties selling for over £1 million declined in 2011; but sales of homes worth more than £2 million continued to grow, according to research by Lloyds TSB. The number of sales of properties that cost at least £1 million in Great Britain was 5% lower in 2011 (6,911) than in 2010 (7,256). This compares with a 55% increase in 2010 and was the first annual fall in £1 million sales since 2009. “Continued demand from wealthy cash rich buyers, both from the UK and overseas, as well as limited supply has meant that this segment of the market remains largely immune from the headwinds facing the vast majority of homebuyers” commented Suren Thiru, housing economist for Lloyds TSB.
Debt agencies chase £58bn of Brit debt
As the economy contracts, debt expands – and by some margin. It is estimated that UK debt collectors are attempting to claw back almost £60bn from British families, be it credit card debt or loans. New data from the Credit Services Association (CSA) claims this figure has jumped by a massive £6bn in the last six months alone.
There are several reasons for the surge. The CSA claims 32m individual debts are now being pursued. That’s the equivalent of at least one significant debt for every UK household or £1,000 of uncollected debt owed by every man, woman and child in the country, says the CSA.
Consumers’ debt caution continues, says BBA
UK consumers continued their cautious approach to debt in March as demand for home loans and unsecured credit remained weak. The number of home loans approved for house purchases was below the recent average, the British Bankers’ Association (BBA) said. Meanwhile, repayments continued to outstrip new spending on credit cards, despite the amount spent having risen. The figures reflect a safety-first trend that has been seen for months. The BBA data showed that the number of home loans approved for house purchases fell from 32,840 in February to 31,888 in March. This was in contrast to recent figures from the Council of Mortgage Lenders which reported a rise in mortgage activity in March.
Rents fall for second month