Here’s a nice bit of gloomy economic news to kick off your week: according to accountancy PricewaterhouseCoopers, the national coffers are at least £600bn lighter as a result of the credit crunch – thanks largely to the tanking housing market and the declining fortunes of our biggest financial institutions. That adds up to more than £1m a minute, which is a lot of money even if you’re a Premiership footballer. And since PwC's research was apparently largely focused on these two sectors, the full horror could be even worse…
PwC says that falling house prices – which slumped by a record 11% last month, according to the Halifax – have already destroyed £400bn of the UK’s national wealth. And with the Government’s prevarication about stamp duty gumming up the market still further, we’re unlikely to see a rally any time soon. Much of this is a knock-on effect from the financial sector’s problems, of course – with an estimated £200bn lost down the back of the sub-prime sofa as a result of write-downs and share price falls, it’s no wonder many banks have become reluctant mortgage lenders.
All of this will have serious knock-on effects for the economy, of course. PwC reckons that when we finally face up to how much poorer we are than last year, it could reduce consumer spending by up to £16bn, wiping about 1% off GDP. That’s almost enough to push the UK into recession – but not quite, according to PwC (although it admits this is a best-case scenario).
The employment figure – the one stat that still seems to be holding up pretty well – will also be affected. A study out today from the Chartered Institute of Personnel and Development suggests that 27% of employers are now planning redundancies this quarter, while less than a third are planning to hire new staff before the end of September. ‘The jobs market has been one of the few bright spots in the UK economy, but cracks are appearing in the face of an increasingly uncertain economic outlook," said the CIPD’s chief economist John Philpott.
At the very least, it’s going to be a nervy time for many UK workers, as employers look to retrench. ‘Even if we avoid the scale of jobs fallout suffered in previous downturns, the era of the candidate's recruitment market is already over,’ added Philpott. Now’s probably a good time to stay on the right side of your boss...
In today's bulletin:
Credit crunch leaves UK £600bn out of pocket
Water lot of money to spend
Editor's blog: The tyranny of technology
Olympics give us a sporting chance
Business Travel Special: Durrants Hotel, London