UK Property Repossessions Set to Rise

During the first weeks of 2011 reports about the UK economy have been nothing but negative and with the current governments refusal to see sense, it's highly likely that we'll see a lot more property repossessions in the coming years as we head into an almost certain double dip recession.

Rise in Cost of Living

Recent reports demonstrate their utter failure on economic policy. According to the governor of the Bank of England, Mervyn King, the value of workers pay is in the steepest decline since the 1920's. This is because salaries are stagnant, inflation is increasing and everything costs more, therefore people are spending a much higher percentage of their income on essentials such as mortgage payments, utility bills, petrol and food and their wages are not reflecting the increase in outgoings.

Since the coalition government came into power in the UK they have made some very poor economic decisions in their efforts to decrease the structural deficit of the country - decisions that are only leading to a contraction of the economy rather than the growth we want to see.

Evidence for this claim come from reports over the last month from the ONS (Office of National Statistics) which show a 0.5% increase in inflation to 3.7% and a 0.5 % shrinkage in the UK economy. Couple these figures with the 2.5 % VAT rise, job losses in the public and private sectors and an almost certain interest rate rise in the near future, the result will be more people finding it hard to manage financially.

One of the most damaging consequences of the coalition governments policies is that we are very likely to see an increase in homeowners struggling to meet mortgage repayments and in turn, a higher rate of property repossessions.

As wages in many private sector companies freeze or are reduced (many companies are asking workers to take pay cuts or reduce their working hours), hundreds of thousands of job losses in the public sector and few private sector jobs to replace them, it feels like we're heading for an explosion in personal debt that no amount of government mortgage rescue schemes or advice llines can avert.

Additionally, recent research from homelessness charity Shelter, had more shocking news for us. Thousands of people around the country are using their credit cards to pay their mortgage payments which is a sure fire recipe for more repossessions in the near future.

Rise in Property Repossessions Inevitable

Low interest rates over the last few years have undoubtedly helped to keep the house repossession figures comparatively low for a country in deep recession, but as interest rates increase to combat rising inflation and many people find themselves out of work, the number of house repossessions can only get worse.

The previous governments policies were centered on helping the economy recover from recession, avoiding a double dip and keeping inflation low. The successes of this approach were seen in the 2nd and 3rd quarters of 2010 as ONS figures showed growth in the economy (which the coalition gov't tried to take credit for). Had Labour stayed in power, cuts in spending were to be spread out over a much longer time frame to aid recovery and reduce pressure on the citizens of the UK and the services they rely on. Say whatever you like about Gordon Brown's people skills - he was a great economic leader and was always spot on in terms of the countries finances.

As the Con/Dem government get into full swing with their austerity program, that is clearly too fast and too deep, (the ONS results speak for their selves) - the dreaded double dip recession is undoubtedly on the way, ensuring that the only way is down for property owners, the employed, the vulnerable and just about anyone who is not on a high income.