The cost of the downturn
Peter Hoskin 9:07am
A useful piece of research in today's Mail:
"The financial crisis has slashed an average of £60,000 from each family's wealth over the past year, it has been claimed.Sliding equity prices and dramatic falls in property values have shaved more than 18 per cent off savings and assets, according to estimates by Capital Economics.
That is the equivalent of an average £60,000 fall in the wealth of every household in the country and adds up to £1.5trillion. The 2008 plunge exceeds an entire year of British economic output."
Such numbers could prove politicaly costly for Labour, too. The more people understand what they've already lost as a result of the downturn - and experience further losses in 2009 - the more likely we'll see the polling payoff described by James yesterday. Meanwhile, George Osborne's defence of savers should gain extra political bite.
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Ray
December 31st, 2008 11:27am Report this commentOne important qualification to this statement is, of course, that with property prices as overvalued as they were, in reality people are not losing out on that particular front. The prices they can command for their houses now are probably a more accurate reflection of their true worth than were the unsustainable Mickey Mouse prices that estate agents were asking at the height of Brown's 'asset bubble'.
Arbie
December 31st, 2008 12:01pm Report this commentI suspect this will hurt, if proved accurate.
http://www.economist.com/opinion/displayStory.cfm?story_id=12811290&source=features_box4
Ian C
December 31st, 2008 4:05pm Report this commentAny wealth accrued during the term of this Labour Gov't has been substantially destroyed in 2008.
The first step was the pension dividends tax, from which the values that investors have put on uk equities has never recovered.
Property prices are still alot higher than in 1997, by some way but the total debt acquired to push them to those levels nets wealth increase down to zero or below. Another great success from a Labour Governement.
When will the middle classes, whose support is essential to elect them, learn?
Herbert Thornton
December 31st, 2008 6:51pm Report this commentI agree with Ray - up to a point.
But I question whether a true yardstick of wealth (e.g. a house) is the amount of money that is paid for it when it is sold.
It seems to me that money is a capricious and varying yardstick. Is it not more realistic to think that the house itself is the more fundamental yardstick - i.e. that the price paid for it is the measure of the value of the money?
From what I have read, when Hjalmaar Schacht so successfully managed the rebuilding of the German economy after the disastrous Weimar inflation, he did it be creating a new (and, until Hitler eventually over-ruled and dismissed him) inflation-free currency that was based on and linked to the value of land.
Waiting for Gobbo
December 31st, 2008 8:07pm Report this commentThat's a bummer, me losing sixty grand. That puts me £67,000 in debt.
One day son this will all be yours.
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