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November 18, 2008

U.K. in Deep Recession

Former U.S. president Harry Truman once said, “It is a recession when your neighbor loses his job, it’s a depression when you lose yours. While we sit around, gripe, and complain here in Canada about the state of our economy the U.K. has it even harder. It is estimated that the economy will shrink by 1.7% in 2009. The unemployment rate could soon reach an overwhelming 2.9 million. It has said to be the worst recession in 60 years. The government like always plans to put details in place to make the recession short and painless but who really knows what the future will hold. On top of the government, the U.K. biggest union Unite has a 10-point plan to help their people in their time of need. Part of the plan involves building a million new homes. Of course, that could backfire and cause a deeper hole in their pockets! During these tough times, people may not be thinking of spending money on new homes.

The banking crisis has made things more difficult. It is much harder for businesses to get credit and credit insurance. Along with this, consumers being aware of the forthcoming recession have stopped spending causes businesses to falter. There is just not the demand for goods and services. Now with the holidays coming up sales are looking bleak. There are always those that are optimists and those that are pessimists. I am usually the later. This is what happened in the U.K. when optimists were nowhere to be found. In fact Bank of England’s governor said this was a once in a lifetime crisis and maybe the largest financial crisis in human history! There is also buzz that this recession could in fact turn into a depression. My generation was not part of the Great Depression. It was from 1929 to 1939, but I am sure we have all heard the stories from our grandparents.

Now everyone has to live within his or her means quoted Alistair Darling, the Treasury Chief. Like everyone else, you had better hope that you had the sense to put away some monies for a rainy day. Of course, we all hear these warnings. We are told to save, save, save but now many of us actually heed the warnings. We are all guilty of over spending, some even going into heavy debt. How will this recession affect those people? At least Britain is willing to admit that they are in trouble and to let the news be broadcast, which is more, then the States is doing. People should be aware of what will be happening in the next few months and the fact that they could lose their belongings to creditors looking for money that they do not have. What makes it worse is the fact that food, gas and energy prices are soaring. So the question is where will the money come from for families in Britain to pay their bills and live day to day?

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