Paper Summary: 4th September 2013

Economy

The UK economy is showing strong signs of recovery as it is forecast to grow almost twice as fast as previously expected according to new predictions from the Organisation for Economic Co-operation and Development (OECD). The British economy GDP is thought to grow by 1.5% this year, which is up from the 0.8% it had previously predicted. In this report the UK was pulled out as one of the developed economies noted for showing encouraging rates of activity, alongside Japan and the US. On the other hand growth in emerging economics has been more restrained. Latest figures in the UK signal there is stable growth in the third quarter with positive readings in surveys for the manufacturing, construction and services sectors. Recent changes in governmental housing policy are also said to be having a good impact on growth expectations. The construction sector is crawling out of the bad lands, having grown at its fastest rate since September 2007 this August according to the purchasing managers’ index for construction by  the Chartered Institute of Purchasing and Supply. It is rising at its fastest rate since before the financial crisis threw the UK into recession and confidence is growing as signs suggest there will be a rise in business activity over the next year.

Employment / Recruitment

Masses of skilled workers are leaving the UK to work overseas as a result of falling job prospects and high prices, according to a recent poll. The poll of 5,600 Brit emigrants working overseas revealed that there is a large chunk (almost 40%) are working as skilled technicians and that another 23% can be categorised as self-employed entrepreneurs. Around 321,000 left Britain to live abroad last year according to recent data from the ONS. Australia was said to be at the top of the list of destinations for Brits leaving the country. Apparently 40% of the people polled admitted they left the UK mainly due to better job prospects overseas which does not bode well for the future as the UK labour market which is already seeing a serious skills shortage across a number of key sectors including the technology and healthcare professions.

Personal Finance

The cost of care has forced over one million families to have to sell their homes in just five years according to new figures, carried out by the polling company ICM for the insurer NFU Mutual. This comes as a major shock, and is far higher than the government estimates have suggested. Charities and pension experts have pointed out that it is evidence of one of the first real attempts to measure the scale of Britain’s funding crisis. Many people think it shows the Government’s long awaited over haul of the social care system in England including the introduction of a cap on bills did not make much progress in addressing the issues facing thousands of families. care minister, Norman Lamb suggested that Britain had become a “neglectful society” and that people are allowing the elderly to spend their years in isolation due to the way that families are dispersed. While the state must play a vital role in supporting people in old age, it was all said that people must step up and provide basic kindness and companionship. Jeremy Hunt’s reaction was also one of concern and he stressed that it highlighted the need for reforms. The Government’s ambitious cap on care costs is thought to be a step in the right direction and will make England one of the first countries where people do not end up having to sell their homes to pay for care.  The results come after a separate study which found that two million people or a quarter of retired home owners are planning to sell their homes to fund their old age.

Property

One in five families rents privately in the UK, which equates to 1.2 million households including single parents according to Shelter housing charity – that’s up from just one million two years ago. And the same time home ownership is at 64% – the lowest figure for nearly 30 years. (In 2001 it was 70%). Furthermore, the English Housing Survey shows the pace of renting is increasing at an alarming rate. People are concerned that new Government schemes such as Help to Buy will push prices up beyond so that they are out of reach for the vast proportion of potential buyers and that only those with the help from the Bank of Mum and Dad or from their grandparents will be able to get a foot on the property ladder. There are fears that creating taxpayer-subsidised hand outs to first time buyers will only boost prices which will result in a housing bubble, and that it will help a select few access the housing market but will make housing even more unaffordable for most people. It has been revealed that almost a third of property purchases would not have taken place without help from the buyers family. The underlying fact is that while house prices have risen dramatically, wages have not kept up at the same rate. Due to the financial crisis, due to pay freezes during this period wages are stagnant. And people are finding it impossible to save up for a huge deposit in order to get a mortgage.

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