Brits blasé about credit crunch but forecasts predict harder times ahead

14 April 2008 / by Rachael Stiles
People living in the UK are relatively relaxed about the effect that the credit crunch is having, or could have, on them now and in the near future.

A survey commissioned by the Financial Times has found that Britons are among those Europeans least concerned about the credit crunch, believing that it has had a minimal impact on their day-to-day lives.

While they remain hopeful about their individual situations, however, Britons are more concerned about their policy-makers than the Germans, Spanish, French, Italians, or even the Americans, putting little faith in their ability to make sound decisions.

Despite being dubious about the UK Government and banks' ability to protect its citizens from the damaging affects of the global credit crisis, Brits maintain that alternatives, particularly European ones, would be worse than the current system.

The British share a lack of concern about the economy with the Germans, and analysts of the results believe that this correlation has to do with the momentum which both countries have accumulated, and both are still experiencing a continued strength in their labour markets, high levels of job creation and falling unemployment levels.

The research revealed that Brits do have some element faith in their policy-makers, because they believe them when they say that the UK is not being as adversely affected as some of its European peers.

Even though Britons remain positive about their current financial situation, they do reveal a hesitance about this continuing in the future, with a third saying that they think their financial position will deteriorate over the next 12 months; additionally, 40 per cent of UK households cited rising food and energy costs as the most prominent problem they face, far ahead of any others.

Ironically, the most optimism can be found in America, where the credit crisis has hit the hardest, with economists there predicting that the US outlook will brighten in the second half of this year.

It's a different story in Europe, where leading industrialists have warned that it will not escape the affects of the credit crisis and that the worst is yet to come, possibly in the next six months.

Peter Loscher, chief executive of German industrial group Siemens, told the Financial Times that he thought the economy will feel the crunch sooner than predicted. "I have no doubt that it coming, probably in six to 12 months' time", he said, adding that it will affect the "real economy", such as exchange rates, raw materials and wage demands.

Likewise, chief executive of Linde, Wolfgang Reitzle, said that "we are in the most critical business environment in decades."

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