by Mark Johnston
It seems that the fate of millions of jobs and life savings currently hang on what will happen over the coming months and years in the Euro crisis.
Research has shown that over the past year the Euro zone crisis has grown worse as many investors have become increasingly concerned by the possibility that some Euro zone governments may be unable to repay their debts.
Sir Mervyn king, governor of the Bank of England, stated “there is a risk of a storm heading our way from the continent”. He has however confirmed that the bank has already begun to make contingency plans for a break up of the Euro.
Labours shadow chancellor, Ed Balls, said “the Bank of England has once again slashed its growth forecast for Britain, but despite this the government says it will just plough on regardless”.
The Prime Minister, David Cameron, has warned that the Euro zone leaders must act swiftly to solve its debt crisis; he suggested that “it has got to take steps to secure the weakest members of the Euro zone, or it is going to have to go in different directions”.
Experts have recently warned that the Euro zone crisis has cost UK households an average of £18,000 so far, they said borrowing costs are up while the prices of shares and homes are down.
So how exactly does the Euro zone crisis affect the average person in theUK?
PENSION: for people looking to retire this yearGreecehas been bad news for them, there is an ongoing slow motion collapse in annuity rates. For example; when a man aged around 65 swaps his £100,000 pension for an annuity, a regular monthly income for the rest of his life, the sum will be just £6,000 a year. In 1990 that sum would have been at least £14,000 a year.
Billy Burrows, of the Better Retirement Group, said of this “it is another nail in the coffin forUKsavers. The retired have been paying the price for the banking crisis through lower savings rates, now people reaching retirement are paying the price for Greece.
The options for those approaching retirement age are looking grim; work for longer an defer retirement. A price waterhouse cooper report recently suggested that babies born today may have to work until 77 before they qualify for a state pension.
INVESTMENTS: the stock market continues to fall heavily in response to the Euro crisis. The Financial Times Stock Exchange (FTSE) has lost 1,090 of its value, wiping £190 billion off the value of theUK’s biggest companies. Also those who have stock market based ISA’s have fared the worst, over the past year some giant funds have lost a quarter of their investor’s money.
SAVINGS AND MORTGAGES: the Euro crisis has kept the interest rates in theUKlow which means savers have received paltry returns on their savings accounts.
However the historic low base rate has meant that mortgage holders have faired much better for now anyway, but with wholesale market prices raising this may not be the case for the not too distant future.
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