Naturally UK citizens are anxious to find out whether the UK will be hit by the Credit Crunch in the same way as the US - the answer has to be: No, there will be differences some of them quite significant.Firstly the sub-prime mortgage market problems are not the same in the UK, there will not be as many 'victims' of badly sold mortgages. The global effects suffered by the lenders has reached UK financial institutions, but there are not likely to be as many instances of negative equity in the UK. However the knock-on effect of a lack of funds for lending will certainly hit UK first-time home buyers.
The extra factors of rising costs are different in the UK, of course the cost of a gallon of petrol or diesel in the UK has always been higher than in the US, so the rises seen here are probably in some sense easier absorbed. On the other hand any further rises could make people more seriously consider their transport options. The weakening dollar has made some imports seem cheap in the UK, whereas imports into the US are looking expensive - This is another way in which the Credit Crunch UK style has a different complexion to the US version.
Unions are traditionally stronger in the UK, so it is more difficult to keep a lid on wage rises - strikes are already under way in some sectors and threatened in others. So in conclusion, we can demonstrate that although both sides of the Atlantic are affected by the same phenomenon, they are not affected in the same ways..
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2 comments:
I'm not really in the know of what's going on elsewhere, so thank you for this information. Here in the US, we're having a lot of issues with money!
The Crunch will affect many nations, but all in slightly different ways i think...
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