It’s no surprise to the ordinary shopper that times are particularly hard at the moment, with the general public hit on all sides with increases on food, petrol, gas and electricity. But the news that we have entered a ‘double dip’ recession is somewhat of a surprise to economists as it was expected that we might just narrowly escape slipping back.
However, as the definition of a recession is two quarters of negative growth in a year, and last year the economy shrank by 0.3% in the last quarter and by 0.2% in this year’s first quarter, we are technically in a recession again. The reason for this appears to be a lack of output in the construction industries which fell by 0.3% in the last quarter, production also is to blame with a decrease of 0.4% while the only industry to rise was the service sector by a mere 0.1%. So what does this mean to the ordinary person on the street and should we be worried?
Joanna Elson OBE, chief executive of the Money Advice Trust, thinks not, and explains, “While the technical recession might have only just returned, unfortunately the people’s recession never really went away. Unemployment has been rising, earnings growth has lagged a long way behind inflation, and Government spending cuts mean that welfare benefits have been squeezed.
Across the country, month by month over the last few years, it has become progressively more expensive to heat up your home, put food on your table and fill your car with petrol.” But with interest rates expected to remain low for another couple of years, are there things we can be doing just in case?
Experts believe that in these situations it is a good idea to have an ’emergency’ cash pot of money that is easily accessed, should you need it. So do not put any savings in a hard to get to account where you may incur charges to withdraw it. Any spare cash, and if you can afford, to put aside a small sum each month, should go into an easy access savings account, such as the Coventry Building Society’s Online Saver.
This pays a pretty good 3.15% annual interest before tax which includes a 1.15% bonus for the first 12 months. Another alternative is the Sainsbury’s Bank’s eSaver Special account which pays 2.90% annual interest before tax, but there is no short-term bonus included. Always make sure you are getting the best deals available to you by reviewing your gas and electricity suppliers, your broadband and tv, your credit cards etc on a regular basis.
This includes your mortgage, see if you cannot switch over to a better deal if you have savings or use your banks free advisors to make sure you are getting the best offers to you. If you have debts and savings then use your savings to pay off your debts. You will never get as much interest in your savings as you will be paying the interest on your debts so clear them with your savings.
If becoming unemployed is a concern to you, then consider taking out unemployment insurance. This is specifically designed to cover your mortgage/rent and other financial commitments, should you become unemployed. Avoid any large expenditures and use your commonsense.
If you do happen to become sick or unemployed, research thoroughly what is available and my advice is to claim everything that you can. You will surely be told if you are not entitled but many benefits are time dependant so if you have not claimed within a certain time frame (usually three months) you may find you have missed out on money that is rightfully yours.