Financial and Business|

British Families See Debt Rise and Savings Fall as the Economic Recovery Gets Thrown into Question

Bandaged Piggy BankIt now seems that the economic recovery has been thrown into question in Britain. In fact, household finances are deteriorating at a faster rate than expected. Some experts point out that household finances are slipping at the quickest rate since the depths of the recession back in 2009. This proves that families are having a very hard time dealing with cuts to wages and rising prices.

These latest concerns are just fueling fears that the economy is going to be hit with a double dip recession. In order to deal with these financial problems most families are dipping into their savings. To make matters worse, others are also taking on more debt to stay afloat, hoping that something will change soon.

Of course, this recent news has come as a shock to many people who assumed that the economy was getting back on track. However, experts are now saying that this spike in spending was the result of certain things. For example, one expert pointed out that the boost in spending was due to the very hot weather in May, as well as the royal wedding. However, the good effects that these events had on the economy have been short-lived. In fact, now some 36 percent of households in the UK have reported that their finances have worsened this month.

However, households are not the only ones feeling the effects of this possible double dip recession. In fact, official figures for retail sales in May show a drop of 1.4 percent. This means that the British economy remains in one of the longest and hardest hitting recessions since the 1930s.

The senior economist over at Markit, Tim Moore, said that it may be summertime, but most families can say that living is far from easy. The big decline in the index is “cooling” down the normally hot summer. Overall, these grim figures are showing that households all over Britain are deteriorating at a very quick pace. People are hitting their savings hard just to stay afloat.

Moore went on to say that the job security index has highlighted how employees in both the public, as well as the private sector, remain deeply concerned about their jobs. The good news is that this may be able to keep problems from building even further. At the same time, it also means that these economic problems could get dragged on for some time, thus, keeping people in this “rough” state.

Right now the question is: What will it take to get Britain out of this recession? In fact, the country finds itself in a “catch 22.” Businesses are having to cut wages and let people go because people are not spending and buying their services. However, people are not buying, because they do not have the extra money to do so. Something will have to give before the situation just gets worse.

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