Speculation has been growing over recent weeks as to how Gordon Brown would respond to the much-discussed topic of rising energy bills. Well, speculation stopped this week as Brown revealed that he would not be imposing a windfall tax on energy companies, but rather he has secured an energy package worth £910m with the top six energy firms to provide relief for those struggling with soaring utility bills.
So what does this mean for you? Brown’s measures can be broken into four main promises:
This set of measures is certainly not what union members wanted and has come under fierce criticism- many saying that the measures are too little too late. The main problem with the measures is that they will, in the medium and long term lead to savings, yet in the here and now they don’t help consumers to pay their bills. The 1st measure on the list is available to all households, yet 2,3 and 4 are not, so it is vital that you visit the direct.gov website for more information to see if you are eligible for help paying your energy bills this year. Also, heed the advice of price comparison site uSwitch and check out other deals with alternative energy companies to see if you can save.
Let’s now review the top money stories for the week beginning 8th September 2008.
US nationalises housing giants – The US has decided to take over mortgage giants Freddie Mac and Fannie Mae. This is a bold move by the US designed to inject some confidence into the US housing market. Although Freddie Mac and Fannie Mae are not mortgage lenders they act as guarantors which means that whenever anyone defaults on a mortgage they are forced to pay out, which has left them in a terrible financial situation – both firms lost more than $1.4bn between April and June this year alone. This has already had positive repercussions for the UK as the London stock market (the FTSE) rose by 3.5% just hours after the decision was announced. It could also spell good news for the UK housing market, although this may take months to have an impact.
Are we paying too much for our food?-The retail price index has declared that food prices are 11.4% higher than they were a year ago. This soaring increase marks the biggest increase in the price of food since 1988. However, it has been revealed by the Consumer Price Index that as shoppers we pay 12.3% inflation on our food, begging the question “have our supermarkets taken advantage of us?” Whatever you think about this plenty of us have been taking action as a recent YouGov poll which shows our changing spending habits. As a nation we have moved towards cheaper supermarket chains as we feel the squeeze on our grocery budgets. This is an excellent way to save pennies, which in turn will leave you with a few more pounds in your purse.
Number of first time buyers reaches record low - The Council of Mortgage Lenders says that only 17,300 people entered the housing market in July, down 5% from June. The average first time buyer needs a deposit of 15%, whereas in June the average first time buyer only needed a 13% deposit. This slow in the housing market caused Graham Beale of Nationwide to say that he doesn’t expect to see signs of recovery in the housing market until 2010.
Unemployment set to rise - David Blanchflower of the Bank of England today predicted that unemployment in the UK is set to increase by 60,000 job losses a month. As this prediction was made the pound fell to a two-and-a-half year low against the dollar as markets responded to the news. Unexpected events such as losing your job can be hard to bear, which is why savings are so important. If you have been caught out by an unexpected event and are feeling worried by your financial situation Moneybasics has some advice for you.