The UK economy is in danger of falling in to a double dip recession according to the Deputy Prime Minister Nick Clegg.
Fears that the economic crisis which in recent months has hit Greece, Portugal and Spain could hit the mortgage broker, with a further drop in demand likely to decimate the mortgage industry once more.
After the troublesome times seen after the initial credit crunch seen towards the end of 2008 within the mortgage industry, European leaders plan to meet on Thursday this week for an emergency summit aiming to tackle the longstanding Eurozone debt crisis currently affecting a number of nations. With Greece, Portugal, Spain and perhaps Italy likely to fully feel the effects of the summit, there are worries that the debt burden may trickle down to the UK too.
When asked if the world was on the brink of another serious financial crisis, Clegg claimed: “I’m incredibly worried. I think the gravity of the uncertainty in the United States, which is basically a product of political gridlock, and the growing fiscal crisis, sovereign debt crisis in the Eurozone is immensely serious. This has a direct impact on British jobs, on the livelihoods of millions of people in this country. That’s why I believe we should play an active role behind the scenes … to help Eurozone members make the reforms necessary to create a strong, prosperous Eurozone in the future.”
This direct impact on jobs is likely to affect the mortgage broker and the wider mortgage industry as a whole. It is vital for banks and bondholders to prevent Greece from defaulting on its current $500 billion debt, yet the UK can not be dragged in to further bail outs on Ireland, Portugal, Spain, Italy and other affected nations as they do not have the finances available. However, if these nations are not bailed out, the worldwide consequences could be huge.
With Britain’s largest banks and mortgage lending institutions seeing their shares hit 12 month lows on Monday, the stock market is clearly taking a cautious and worried approach to the results which will be seen in Brussels in the coming days. The continuing lack of confidence within the banking industry and the wider UK economy can only be worrying for the mortgage industry and the mortgage broker as a whole. It is hoped that Thursday’s talks will have a successful conclusion to see increased confidence within the UK economy, continuing to see Britain recover from previous years of economic hardship.