UK Job Losses Worst In Europe
The UK suffered the highest job losses in Europe during the first quarter of 2009 according to a European Restructuring Monitor published by Eurofound. Job cuts in the UK totalled 63,314 – by far the worst of any single country. Next worst was Poland with 38,975, then Germany with 17,461 followed by France with 11,779.
Given the nature of the current economic crisis, it was financial services, car production and retail services that bore the brunt of the losses. This recent announcement now confirms that job losses are running at a rate that is three times the number of jobs that are being created.
Eurofound warn that the signs of the recession deepening further are still evident. Despite the number of new jobs created having risen in each of the last two quarters, these are mainly in the lower skill segments of bargain retailers, hotels, fast food and chain style restaurants. Further evidence of significant job losses were confirmed when BT announced that it was to make 15,000 more cuts this year on top of the 15,000 already made during 2008.
The biggest rise in the number of people claiming Job Seekers Allowance has been in the South of the country. There are now 58% more claimants in the South West and 47% more in the South East compared with the end of 2007. Most other regions of the UK are running at between 30% and 44%. Northern Ireland saw job seekers numbers rising by over 50%.
Allowances and benefits fall well short of what people used to have by way of income to service household day to day living expenses and debt repayments. The number of people falling behind with their mortgage payments, loan repayments, taking out Individual Voluntary Arrangements or declaring bankruptcy has all risen.
Debt management at times like this is crucial. Lenders have been hit hard by the financial credit crunch and now economic recession so have less leeway in allowing customers to default. Therefore, it is vital that any household suffering a dramatic drop in income make contact with their lenders to seek some form of rescheduling of payments to ease the cashflow burden. It is easier and demonstrates responsible borrowing if you make contact with your lender before you default to explain your predicament. No lender likes to manage debt – it is expensive, time consuming and messy for them so they would rather reschedule payments to match income before there is a problem than when it is too late.
If you have severe debt problems then you will need to do some significant prioritisation of the family budget. Analyse all your income and savings and look at the level of crucial payments – those that need to be made. These include mortgage or rent, council tax and utility bills. Discretionary spend areas such as entertainment, health club memberships or holidays may have to be sacrificed in the short term until you get back on your feet.
If you can't agree a voluntary rescheduling of debt with your borrowers, then you may need to look at a more formal debt management plan. Consider a debt consolidation loan that allows you to borrow enough on a new fixed term loan at lower interest rates over a longer period with which to pay off expensive debt such as credit or store cards or high rate loans. Despite the current financial crisis, competition for personal lending is still high and you should be able to apply for an unsecured loan of up to £15,000 at rates below 10%. Maintaining your credit history is vital to get the best terms possible – so early action is key.
If your debt problems are more severe and you cannot see any way of raising enough money to pay off your debts, then you may have to consider an Individual Voluntary Agreement. This is a formal plan agreed with your lenders where they will write off part of the debt owed provided you maintain a payment plan for the remainder over a period of up to 5 years. Whilst you can negotiate this yourself, you may find it easier to use one of the many agencies and Insolvency Practitioners that offer this service. Since they are used to negotiating with lenders, they should be able to cut through the procedures and discussions quickly and gain agreement to a plan based on your personal circumstances.
Fees for the IVA are usually wrapped up in the monthly payment you make to them as plan manager so on the surface it appears to cost you nothing. Check charges and fees though to make sure you fully understand what you are getting as a service.
With recovery forecast not to start until 2010, and unemployment looking to rise to over 3 million by the end of 2009 the immediate future looks bleak for jobseekers. Getting control of your revised financial position – or planning for the possible worst now by getting your finances in order – could reap significant dividends later.