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Finance Friday: preparing for the future

It’s hard to predict the future, but if we are to survive in these austere times we have to try to prepare for even tougher times. It seems George Osborne plans even more cuts and austerity if the Conservatives win the next general election.

More austerity

More austerity and cuts in government spending at both national level and local level seems likely. Groups who are not avid voters in elections are bound to be targeted such as job seekers, the young and students.

Hitting the elderly

Who will be targeted? It seems likely that minorities will be targeted again. The elderly could get benefits cut. Not the triple lock on pensions of course, but housing benefit and council tax benefit could be targeted and so could pension credit. Public sector pensions will almost certainly be cut and wage rises limited again.

Contracts

There is a lot of money in government contracts and the government favours a handful of companies. They get about 500 million in business each every year. The same names come up every time there is a scandal associated with them not giving value for money. These companies build and run prisons and have been building our hospitals and schools. How long before these outsourcing companies are running our hospitals and schools? It won’t happen? Just watch as private companies start to take over imaging departments, ambulance services, mortuaries and pathology. Then it will be catering, linen services and cleaning. Once the necrosis starts, where will it stop? We have already seen privatisation of hospital car parks and outrageous charges.

Interest rates

One of the new ‘stress tests’ for mortgages asks whether the new mortgage payer could still afford the mortgage if interests rates increased by 3% in 5 years. What does this suggest? The governor of the Bank of England has already made clear they intend to increase interest rates slowly. Starting when? After the general election? By how much? Would he have 3% over 5 years in mind? Can you afford 3% on your mortgage? How about 3% extra on that credit card debt and that personal loan?

Taking action

It would seem sensible, regardless of you politics to prepare for the worst now. Pay off some of your debts and live within your means. It would seem a bad time to take on a new mortgage without careful thought too. It seems the days of low interest rate mortgages are numbered.

A Labour win?

If Labour win the election next year will policy be any different or will they follow advice from the Bank of England? I would guess that the economic policy might be looser and so there would be less austerity, but interest rates will go up just the same. Ed Miliband seems a bit clueless and so I’m not hopeful that new policies will be announced in the next year that won’t be the same old stuff repackaged. They will probably promise to increase the minimum wage and that will be offset by increases in rents and council tax by local Labour politicians. The workers will be no better off, the rich will laugh all the way to the bank…

What do you think? Are you prepared for 5 more years of austerity? Share your thoughts in the comments box or you can follow me on Twitter.

One Response

  1. Pingback: The Review: Birmingham floating market | Mike10613's Blog

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