The UK has been affected by the economic downturn and financial crises just as much as the rest of the Western world. In 2008 and 2009 the government under PM Gordon Brown intervened to save the Northern Rock Building Society and the RBS and Lloyds/HBOS banking groups from collapse. The new government under David Cameron is now taking strict austerity measures to protect the country’s credit rating and to reduce the budget deficit. Unfortunately this is causing a lot of financial pain, and the real possibility that the economy will drift back into a period of zero or negative growth.

More people than normal are asking for help from charities such as CAB (Citizens Advice Bureau), and the local CAB offices report that many need help with very high levels of personal debt. Other major areas of concern are welfare benefits and housing issues.

Debt problems often come to a head due to a sudden financial shock, such as loss of income due to unemployment or illness. Rising prices (especially fuel and utility bills) may also cause problems as incomes are no longer keeping pace with inflation, and less disposable income is left over for repaying loans and credit card bills.

Although people can become very stressed by debt problems, and it is true that money problems are a major cause of marriage and family breakups, there is free and confidential help available. Ignoring financial problems does not make them go away, and often the best course of action is to face up to the problem, no matter how difficult that sounds.

In all parts of the UK, people can find services which offer confidential, free-of-charge and no-obligation debt advice. These services are provided locally by Citizens Advice Bureaus, which can be found in most towns and cities, and nationally by groups such as CCCS, National Debtline and Payplan.

Trained advisers can help clients identify income, expenses, assets etc and classify debts into priority and non-priority groups. Different solutions can be explored, such as DMPs (Debt Management Plans) and IVAs (Individual Voluntary Arrangements). These arrangements are often acceptable to creditors, and are always based on affordable monthly payments reducing the total amount owed while leaving enough money for all necessary living expenses.

Question by Anony Mouse: So tax cuts and economic growth are going to “cure” the deficit and debt – in a recession?
I know that McCain and Obama’s tax plans are virtually identical, but why do I see so many people making the argument state in the question. Do you realize that with an average tax pressure of 14%, US GDP would have to rise by 20% per year JUST to balance the budget, never mind the $ 11 trillion debt?

With that in mind…
How are tax cuts and economic growth going to “cure” the deficit and debt – in a possible economic recession, or at least a severe slowdown?

Best answer:

Answer by whimsy
Obama is not cutting tax revenue – he is in fact increasing it. He is merely cutting the lower and middle class rates and shifting more burden to the wealthy

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Sometimes in life, every one of us has to endure financial problems. Since the recession, this has been more prominent.

There are numerous reasons for these financial problems; however, the most common now is a fall in income. This could be due to a family member being made redundant and therefore halving the income coming into the house on a monthly basis.

If you still have your job, then you may well have seen your wages reduced or your hours go down over time.

It is certainly nothing to be ashamed of if you suddenly find yourself tight for cash. It just means that you are in the same situation as many others.

If you hide from the truth and the situation you are in, this is the worst thing you can do, as things will not change without some effort on your part. You have to make things change and improve by yourself.

If you do not own property, then the only assistance comes in the form a debt management plan, because loans are not available unsecured now. These should only be thought of as a last resort, though, as they can cause long term damage to your credit rating.

However, if you do own a home, then you are in much better situation as you apply for a secured debt consolidation loan. This is actually a homeowner loan that has a great interest rate. This type of loan gathers all your loans and credit cards together into one lump payment, so it means you will have a lower interest debt payment each month.

You will be able to make some huge monthly savings with these types of consolidation loans and the interest rates are low if the debt loan applicant has a good credit history. If the credit rating is not good, however, there is still the option of getting bad credit loans at higher rates of interest.

Some credit cards have huge interest rates that in some cases are as much as 40%. Even if you have a bad credit history then a bad credit loan can be invaluable to you.

However, if you have a good credit history then the savings you make can be massive and sometimes more than one hundred twenty dollars a month. This is because the interest rates are much lower than that of credit cards.

If you are considering taking out a debt consolidation loan then you should contact a lender that deals in homeowner loans, and they can give you a quotation that suits your needs.

Best answer:

Answer by Shovel Ready
Illogical presumption to start with here. It the debt ceiling stays where it is, the government will prioritize its expenses. Interest will be paid. Crap will not be paid. Then the economy will start to recover.

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Question by allie: How to recover from an economic recession without risking sovereign debt crisis?
we are discussing this topic and i have to represent USA and come up with some solutions.
how can countries possibly recover from an economic recession without risking sovereign debt crisis?
also, what are some sovereign debt crises that occurred in the past, and what went wrong there?

thanks so much.

Best answer:

Answer by zorathruster
A recession is a drop in GDP. Some say for three consecutive quarters. World demand is not constant, national demand is not constant. Thus there are times when the inventory cycle gets ahead of the demand cycle. The demand cycle can be affected by events like international terrorism or war among nations.

The best way to prevent government intervention would be a consistent employment program which would allow flexible use of workers during a GDP downturn. This would keep the majority of people employed and prevent a contraction in expenditures. Since companies don’t want the responsibility they off load it on the government who provides “unemployment” compensation during economic downturns. That gets extended indefinitely by liberal govts and eventually cut for conservative govts. This expenditure, well beyond the normal govt expenses causes a debt to exceed planned levels.

Thus, the best solution is ensuring companies have to provide extended benefits for those people they “let go” during downturns. This would prevent them from downsizing and exacerbating the economic effect of perturbations.

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