The GDP or "Gross Domestic Product" of the United Kingdom – a measure of the amount of goods and services produced by the country as a whole – contracted at rate of 0.3% between July and September, according to official figures. This was in fact, a downward revision of the original estimate of 0.4%, but was nonetheless, an indication that the economy remains in recession. The UK GDP has now contracted for six quarters in succession, making this the longest recession since records began, back in 1955. Statisticians have recently pointed towards the voluntary vehicle discount, or "scrappage" scheme as a contributory factor. The scheme, which provides a discount of £2,000 off a new vehicle from a participating dealer for buyers who scrap a vehicle over 10 years old, led to an influx of foreign vehicles in the second quarter of the year. This in turn, contributed to an increase in the trade deficit, from £6.5 billion to £7.2 billion, hindering economic growth. Whatever the cause, Chancellor of the Exchequer, Alistair Darling is expected to admit in his Pre-Budget Report, that the recession is deeper than feared and to revise his original forecast of a 3.5% contraction for the year to 4.75%; a contraction of that magnitude would rival the worst year of the Great Depression of the Thirties.
Coping With Recession
If you do find yourself in financial difficulty as a result of the recession, the worst thing that you can do is to bury your head in the sand, in the hope that financial worries will disappear of their own accord. They won't, of course and ignoring telephone calls and letters from your creditors will ultimately make your financial problems worse, not better. It's fine to worry about debt, as long as worrying is productive, in the sense that it motivates you to take action to improve your financial situation. It's important not to panic however, because in your panicky state you may make rash decisions, such as borrowing money at high interest rates, or against your home, without considering the consequences.
What is required is a calm, calculated approach to solving your debt problems; contact your creditors as soon as possible to explain your financial situation and what you're doing to improve it and seek independent, impartial advice. There are numerous organisations operating locally, regionally and nationally that can offer advice, free of charge, on all aspects of debt and other issues relating to the recession. The Citizens' Advice Bureau may be a good place to start, but other advice groups include the Consumer Credit Counselling Service and the National Debtline. If you are facing serious debt problems – that is, unsecured debts of £15,000 or more – you may like to talk to a licensed Insolvency Practitioner, regulated by the Insolvency Service, about an IVA or "Individual Voluntary Agreement", as a means of solving them. If you have access to the Internet, all of the major debt organisations have websites, so you can start investigating the help available straight away. In any case, there is truth in the old adage, "A problem shared is a problem halved"; talking to a debt counsellor about your debt problems will instantly make you feel better and acting on their advice will make you feel better still.
If your financial situation is more manageable, there are still several basic things that you can do to maximise your income, minimise your expenditure and better equip yourself to cope with the recession. As far as maximising your income is concerned, there is obviously only so much work than any one person can do, but benefits, such as Housing Benefit, Council Tax Benefit and Working Tax Credits are available to those on low incomes, so make sure that you are receiving all the money to which you are entitled. Grants for home insulation, which can significantly reduce your domestic fuel bills, are also available. You might also like to consider selling unwanted items, such as clothing, books, CDs, DVDs, etc. on an online auction site such as eBay or at a car boot sale, to generate extra cash. As far as reducing your expenditure is concerned, you may be surprised by the amount of money you can save simply by telephoning your utility providers – electricity, gas, telephone companies, etc. – and asking them for a better deal. Comparison websites are another alternative and can also be used to track down cheaper deals on mortgages, car insurance, home insurance, etc.
It is vitally important to work out a monthly budget, so that you know exactly how much money is coming in each month and going out on essentials, such as mortgage or rent payments, food and utility bills. These essential outgoings should always take priority, simply because of the consequences of not paying them, with any money left over used to service non-essential debts, such as credit cards, etc..