- Low inflation
- Low Pound
- Very low interest rates
- Declining output / rising unemployment
- People with Tracker Mortgages. Tracker mortgages are tied to base rate so as base rates fall, people experience a significant decline in monthly mortgage payments. People with standard variable mortgages have benefited, though not as much because banks have often not passed the whole rate cut onto consumers.
- People with Large Debts. Low interest rates are making interest payments cheaper. One beneficiary of the low interest rates is the government. Interest on public sector debt has declined. Therefore, even though national debt is increasing sharply, the cost of servicing the debt is not rising ( at moment). In theory people with credit card debts should benefit, but, in practise, banks have not passed rate cuts onto those paying credit card debts. Interest rates are still around 16-17%
- UK exporters. The plummeting pound is creating a real boon for exporting firms. They are experiencing rising profit margins which is helping to insulate them from the recession. Nevertheless the global downturn is so severe, that demand is still stagnant and the UK manufacturing sector is still declining.
Losers from Current Crisis
- The Unemployed. Jobs are being lost across the economy from finance to real estate and retail. The costs of unemployment are very high for those affected and dwarf other issues.
- Savers. Savers are losing out because of the low interest rates. The important issue is the real interest rate. Last year, the official interest rate was lower than the inflation rate giving a negative real interest rate. The only comfort was that banks were offering saving rates higher than the base rate.
- People approaching retirement. People approaching retirement are being affected by the decline in the stock market. Because most pension funds invest in the stock market, the value of pensions has declined meaning people will receive lower pension payments.
- British Expats. People living off savings in Euroland are experiencing both lower interest rates and a decline in the Euro value of their income. People who moved to Spain for low living costs are finding everything is becoming more expensive.
- Housing Market. The UK housing market has a twin problem of falling house prices and a stagnant market. It is bad news for anyone associated with the housing market from estate agents to construction workers.
- Government. The recession is bad news for government finances as tax revenues fall and spending commitments rise. This is exacerbated by the need to bailout large banks resulting from credit crisis.
- Finance Sector / Construction Sector. The recession is affecting all areas, but these areas in particular are suffering a sharp downturn.
When making a list of winners and losers, it is important to bear in mind which are more significant. For example, some people may be seeing their mortgage payments fall, and they may be benefiting from lower petrol prices and lower VAT. However, they feel this is all outweighed by the fear of unemployment. Therefore, even though they may be technically better off they don't feel it.