Interest rates could stay this low until after 2012

Financial commentators are starting to speculate whether interest rates will move at all next year (2012). This implication being that it could be 2013 before we see any chance in this unprecedented low base rate. The UK has never seen interest rates held at such a low rate, to sustain this rate for the forseeable future is testament to how seriously the BoE take the crisis, it also indicated that the crisis is far from over.
Nett investors will be pulling their hair out - those with a mortgage will be delighted to hear the news. Those with tracker-type mortgages will be able to continue with thier miniscule repayment rates - even those with fixed rates should be able to negotiate a better deal as the long-term prospects start to look more certain. I would urge those who are making good savings to consider making over-payments (after consultation with a financial advisor of course..) to lower the principle amount of the mortgage. This has the effect of lowering repayments in the long term, and is especially important if, like me, you have an endowment mortgage that will not materialise into a pot big enough to pay the mortgage off in full.
I have used the principal of retaing the level of payments that we were paying about three years ago even though the actual interest payment has dropped dramatically. The extra we are paying is reducing the original debt (principal) which is good for two reasons:
It means the amount raised by the endowment will be closer to the actual amount owed
As the principal is being paid off, the amount of interest keeps falling even when the interest rate is steady.
Of course, one has to bear in mind that the endowment itself will grow in a very restricted rate during this time of low interest, but at least by over-paying whatever happens, we will be doing our best to overcome any of the negative effects. One other thing to bear in mind is that when rates eventually climb again, all the overpayer has to do is reduce the overpayment to maintain the same standard of living. The temptation is to spend the 'extra' money released by low interest rates - which will mean an adjustment of spending patterns when the rates come back up - an adjustment I would rather not have to cope with..

Euro-zone troubles

In what can only be described as a short-term measure, the Central European Bank is preparing to buy up Italian and Spanish debts in an attempt to stabilise the Euro. This comes in the wake of the down-grading of the US credit-rating - which to be fair, is nowhere near as bad as actually defaulting on debt re-payments.
However, the market is jittery and some steady nerves are needed along with some strong leadership. Like it or not, you cannot spend your way out of debt, and the over-spending of recent years is starting to reveal itself.
The parallels with personal spending are obvious, we the consumers have been overspending, this has triggered government and municipal overspending, and once the debt starts to get to the unmanageable stage, some hard-hitting cuts have to be made whether you are talking about a household or as a national economy.
Member nations of the European economy must face cost-cutting head on, jobs will be forfeit as over-spending produces unrealistc demand for employment - when the spending is curbed, the jobs will go. Of course this is not a perfect model as the fallout is not limited to the specific over-spend areas, the effect will be economy wide.
It has long been my belief that much of this overspending is a result of the over-riding appetite for consumable gadgets that is prevalent in the Western economies. However, demand is so insistent, that consumer choice may dictate that gadget-related jobs can be sustained and more fundamental consumer goods manufacturing and marketing might be under threat. I'm not saying that people prefer iPads to food, but somewhere along the line, gadgets are becoming more of a necessity in the public consciousness and less of a luxury. Personally I am quite sure that this is not a good thing when along with the desire for the gadget, comes the likelihood that in 6 months time, the same piece of kit will be on eBay for a quarter of it's original price, sold to partially-fund the purchase of the next generation must-have kit (which, it turns out, the consumer can ill-afford).
The only good thing to come out of the uncertainty (if you are NOT a nett investor), is that interest rates remain abnormally low, and the BoE have not the stomach to raise them and the mortgages of half the nation along with them..