Holidaymakers travelling to Greece this summer are being advised to take euros with them rather than relying on credit cards and cash machines.
The advice from the Greek Tourist Board in London is in response to the possibility that the financial crisis could force banks to switch off their cash machines. While they are not expecting problems at the moment, they state that tourists should not visit the country expecting to rely solely on cash machines and credit cards.
The Foreign and Commonwealth Office’s official guidance to anyone visiting Greece is to take enough cash with them to cover unexpected delays and emergencies.
Bob Atkinson from Travelsupermarket.com said that travellers to the debt ridden country should take with them a number of different payment options. He referred to the Cyprus bailout in 2013 when some restaurants and shops would not accept card payments and many banks limited cash withdrawals.
The Greek finance minister, Yanis Varoufakis, has said that his country could run out of money in a matter of weeks. Greece owes a total of 323 billion euros and its economy has shrunk by 25 per cent since the start of the Eurozone crisis. The total debt is 175 per cent of the country’s gross domestic product. Sixty per cent of the money owed is to the Eurozone and 10 per cent to the International Monetary fund, IMF.
Greece has until the end of June to reach an agreement with its creditors. The financial situation was described as ‘terribly urgent’ by Mr Varoufakis. Eurozone member states are insisting that Greece makes a number of reforms in return for its bailout, one of which is to cut pensions.
Concerns continue that Greece might default on the money it owes to the IMF, although these have been somewhat allayed by the news that it has made part of a £750 million payment due on May 13.
Both UK shares and the value of the pound shot up following the Conservative win in the general election.
Traditionally, investors in the UK are thrilled by a Conservative win and the Tory party’s unexpected clear win was no exception. The FTSE 100 rose by 1.7 per cent even before the final seats had been declared whilst the pound rose by two cents against the dollar. The pound also rose against the euro, climbing rapidly by almost two euro cents.
Earlier opinion polls had indicated that no one party would win a clear majority, to the nervousness of the financial markets which had feared the possibility of a hung parliament, bringing with it a long period of uncertainty. Jason Hughes, from CMC Markets, a trading firm, said that the financial markets favour periods of stability and certainty and this win enables the Conservatives to continue to push through their policies of the previous parliament.
Bank shares initially saw the largest increase because the Conservative win lessens the likelihood of a rise in bank levies. Lloyds Banking group shares surged by 5.9 per cent and shares in Barclays by 4.1 per cent. Energy suppliers also saw their share prices rise because Labour had promised a freeze on energy prices and greater powers to the regulator, Ofgem. Shares in Centrica, owner of British Gas, were up by 7.9 per cent within hours of the news of the Conservative party victory.
However, according to analysts the rise in shares and the pound could be short lived. The possibility of Britain leaving the European Union will become a very real issue over the coming months and this will affect trading. Bill O’Neill of UBS Wealth International said that Britain’s possible exit of the EU and Scotland’s devolution will impact on the value of the pound sooner rather than later.
According to the British Banking Association (BBA), borrowing with either a loan or an overdraft has grown by 4.4 per cent during the past twelve months, the fastest growth since the financial crisis of 2008.
During and after the recession, bank clients were more cautious but confidence is now at a six year high.
Some experts are expressing concern than many of those choosing to borrow money from their banks could find themselves in financial difficulty should interest rates rise from their record low of 0.5 per cent.
Analysts believe that borrowing has increased because wage levels have remained fairly stagnant and many households are feeling the squeeze on their ability to make larger purchases.
Many consumers are choosing to make purchases they have put off for years. Chief economist at the BBA, Richard Woolhouse, said that demand for personal overdrafts and loans has risen steeply during the past year. Consumers are clearly feeling more confident about more expensive purchases such as cars, holidays or home improvements and this is indicative of the recovery of the economy.
However, Mr Woolhouse added, the number of consumers choosing to place their savings in High street banks is reducing, probably because of the higher interest rates offered by the new Pensioner Bonds.
Michelle Highman, chief executive of the Money Charity, said that the increase in loans and overdrafts over the past twelve months shows that the banks are increasingly willing to lend money to their clients.
Unsecured borrowing is likely to boom over the coming five years, reaching 55 per cent of total household incomes by 2020 according to the Office of Budget Responsibility (OBR). The current level is 37 per cent.
The OBR is also predicting that house prices will increase by as much as 30 per cent by 2020.
More payments are now made by card than with notes and coins, according to The Payments Council.
The use of cash to pay for goods fell to less than half of all payments made during 2014. All other payments were made by debit or credit card, cheques or electronic transactions.
The Payments Council said that the move towards mobile and contact-less payments is set to continue and that cash payments are likely to fall by as much as 30 per cent over the next ten years.
Cash is still the most commonly used payment method, however, accounting for more than eight out of every ten purchases made in pubs, newsagents and clubs last year. Nearly 80 per cent of all goods bought in convenience stores were also paid for with cash.
24 per cent of all payments were made by debit card and a further ten per cent by direct debit.
The use of cheques is continuing to fall with only 1 per cent of consumer payments made by cheque in 2014.
The Bank of England has announced plans to change the look of much of the cash we keep in our wallets and purses. There will be a new 12-sided £1 coin in 2017; a plastic £5 note in 2016; and a plastic £10 note in 2017. The plastic notes are made from polymer and have a life expectancy of twice that of the traditional paper note. Polymer bank notes are already in circulation in Scotland, a year ahead of the rest of the UK. The plastic £5 has been issued by Clydesdale Bank and commemorates the 125th anniversary of the Forth Bridge.
Other findings by The Payments Council were that only 4.4 per cent of adults rarely use cash and that the average cash withdrawal made at ATMs in 2014 was £67.
Britain’s economic recovery slowed sharply in the first quarter of 2015, according to official figures from the Office for National Statistics.
The economy grew by only 0.3 per cent between January and March, half as much as that of the previous quarter. Economists had forecast a growth rate of 0.5 per cent.
David Cameron warned that the UK’s economic recovery could not be taken for granted and that a Labour government would put it in jeopardy.
The rate of growth for the first three months of 2015 was the slowest since the final quarter of 2012, when economists believed that the economy might fall back into recession.
The slowdown in the economy was unwelcome news to the Conservative party, coming in the final week before the next general election. Chief economist for IHS Global Insight, Howard Archer, said that the newly released figures would give a ‘jolt’ to the Coalition government, who had been hoping that the continued recovery of the economy would persuade undecided voters to vote for them.
The service industry was the only UK sector to show growth. The output of services, such as bars, restaurants and hotels, grew by 0.5 per cent during the first quarter but this was still down on the rate of growth for the last quarter of 2014, when it reached 0.9 per cent. It is, in fact, the only sector to have recovered and exceeded its pre-financial crisis level.
Other sectors shrank during the first three months of the year, with construction falling by 1.6 per cent, industrial production by 0.1 per cent and agricultural output by 0.2 per cent.
Industrial production barely grew, managing a growth of just 0.1 per cent, brought down largely by mining production and water and waste management.
Britain has negative inflation for the first time in more than fifty years, according to the latest Consumer Price Index figures – the index used by The Office for National Statistics to measure inflation. In February and March, the rate was measured at 0 per cent and this fell by 0.1 per cent in April, to – 0.1 per cent.
The last time Britain had deflation was in 1960 when Lonnie Donegan topped the charts, a loaf of bread cost the equivalent of 5 pence and a house could be bought for £2,500.
Negative inflation means that the money in your pocket will go further because the cost of living is falling, rather than rising. It also means that interest rates are likely to stay at their record low for some time to come. This is bad news for savers but good news for borrowers, who will continue to enjoy cheaper borrowing costs.
Economists are calling the current consumer price index decline negative inflation rather than deflation, because the former is used to refer to a short term situation and deflation when it lasts for more than a month or two.
The Governor of the Bank of England, Mark Carney, expects Britain to have negative inflation for a brief period only, referring to it as a ‘temporary period of falling prices’ rather than something more damaging to the economy.
Mark Carney has said that this period of negative inflation is ‘unambiguously good’ for everyone. We all benefit from lower food prices and lower fuel costs. What’s more, spending less on petrol and groceries means that we have more spare cash to spend on other things which, in turn, is good news for the UK economy. Experts predict that the average householder will save £140 a year because petrol prices have fallen.
Insurance companies are not making it clear that payment by instalments is more expensive, says the Financial Conduct Authority, (FCA).
Paying insurance premiums in monthly instalments costs more than paying annually and the insurance regulator, the FCA, says that this is not made clear enough by insurance companies, brokers and comparison websites. As a result, comparing the insurance products offered by different companies is difficult.
The FCA has instructed all companies concerned to take action where appropriate.
According to the regulator, a number of insurance firms, brokers and other intermediaries do not always make the overall costs of paying for insurance explicitly clear to customers. Consequently, many do not understand that paying by monthly instalments is more costly than making one annual payment alone.
Research by the Financial Conduct Authority focused on car and home insurance sold online by thirteen insurance companies and 30 brokers. It examined the process from first enquiries to the point where clients pay for the product they have selected.
The FCA’s acting director of supervision, Linda Woodall, said that customers are entitled to a clear explanation of the payment options offered to them. Consumers expect a fair deal which means that they should be able to view exactly what they are signing up for and the precise costs involved.
Some insurers or their intermediaries were providing credit to their customers but failing to set out the interest rate, fees and charges, the annual percentage rate (APR) and the total amount payable in a representative example.
In some cases, reported the FCA, it was not clear that an additional fee would be charged by the credit broker as well as the insurer.
A spokesperson for the Association of British Insurers said that they would consider the FCA’s findings, in order to insure that consumers were made fully aware of the cost of different payment options.
The Governor of the Bank of England has said that Britain should hold the EU in or out referendum, promised by the Prime Minister, as soon as possible.
Speaking on the Today programme on BBC Radio 4, Mark Carney said that the continued uncertainty regarding the outcome of the EU poll would hurt the economy if companies decided to postpone investment plans.
Carney said that many businesses were already expressing concern about the possibility that Britain could leave the European Union and that it was in everybody’s interests if the poll took place ‘as soon as necessary.’
The European Union is the world’s biggest economy, it is the biggest investor in Britain and the biggest destination for UK investment.
Prime Minister, David Cameron, has promised an EU referendum by the end of 2017. Mark Carney’s words will fuel speculation that the poll could take place next year.
The Bank’s Governor was keen to play down the theory that low productivity in the UK and weak wage growth are caused by the influx of cheap labour from Eastern Europe. He argued that there are more Britons prepared to work longer hours and older people willing to work close to and beyond retirement age, and that this is why wages have not grown significantly.
Carney explained that over the last two years, three thousand older workers have stayed in the labour market than were doing so more than two years ago. Moreover, people are working longer hours which, in effect, adds up to another 200,000 workers, the equivalent of an extra 500,000 workers in total. Net migration over the last two years has been only one tenth of that, 50,000 workers.
Carney also argued that migrants add to productivity because they usually first find employment in jobs for which they are overqualified, before moving into jobs that are more suited to their abilities.
Consumer borrowing has escalated by as much as £1.2 billion from February to March of this year, the steepest rise since the financial crisis of 2007 to 2008, says the Bank of England.
The sharpest increase was in loans, overdrafts and other types of unsecured borrowing, accounting for £1.1 billion of the rise, according to Bank of England figures.
Credit card lending and mortgage borrowing remained largely flat. In fact, March saw 180 fewer mortgage approvals than the previous month. Credit card lending increased over the same period but by a relatively modest £200 million.
The surge in loan and overdraft consumer borrowing is probably due to the fall in the interest rates commonly charged by lenders. According to the consumer finance website, ‘Moneyfacts,’ someone borrowing £5,000 twelve months ago would have had to pay charges of 9.1 per cent. He or she would only have to pay 8.1 per cent now, on the same amount.
Both charities and economists are warning that the sharp rise in borrowing may lead to an increase in debt difficulties for consumers.
Howard Archer, chief economist at IHS Global Insight, cautioned that consumers are likely to be increasing their amount of debt in order to fund their spending. The charity for those in debt, StepChange, expressed concern that the surge in borrowing indicates that many are turning to credit to make ends meet, without having the means to repay all of their debt.
However, the Insolvency Service has reported the lowest number of personal insolvencies for ten years. During the first quarter of 2015, only 20,825 people were declared insolvent, the lowest number since 2005 and a decrease of 18.6 per cent from twelve months ago, one of the sharpest falls since records began
Thousands of Britons are cashing in on the strong pound and buying their euros weeks or even months in advance of their summer holidays, say foreign currency brokers.
Travel agency and foreign exchange broker, Thomas Cook, reported a surge in the number of customers buying European holidays and the amount of euros they were buying. The number of euro transactions were up by one third from the same time last year it said, whilst sales by value were up by 65 per cent.
During the last two weeks alone, Thomas Cook said they had sold more than 31 million euros, at a cost of £22.8 million.
The head of exchange at Thomas Cook, Fraser Millar, said that some customers were buying euros in advance of their summer holidays while others were buying them before they had even booked a holiday.
The Post Office also said that its sales of euros were up by more than fifty per cent on the same time last year. During the last week in January when the euro was at its lowest against the pound, sales rose by as much as 363 per cent.
Saga Travel reported that its euro sales between February and April were twice as much as they were during the same period last year. Asda Money reported an increase of 20 per cent.
Andrew Brown, of Post Office Money, said that customers are more likely to choose their holiday destination based on where they can get the best value for their money.
The pound is not only strong against the euro but has also made gains against other popular holiday currencies, such as the Turkish lira and the Thai baht. Sales of the Croatian kuna increased by 91 per cent in April of this year, compared to the same month in 2014.
For a typical loan of £30,000.00 over 120 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £598.34.
Including a Product Fee of £2,400.00 (8% of the loan amount) and a Lending Fee of £807.00, the total amount repayable is £71,800.20.
Annual Interest Rates ranging from 11.88% to 29.38% (variable). Maximum 50.00% APRC. The loan must be paid back by your 70th birthday. Read more.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
