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The Friday Five: the financial crisis five years on
It might have been half a decade since the start of the credit crunch but it's clear we've still got a long way to go down the road to recovery...
by Victoria Bischoff on Aug 10, 2012 at 11:38Follow @VBischoff
It has been five years since the start of the credit crunch and while we're not in quite the state we were, it's clear we still have a heck of a way to go on the road to recovery.
1. Our economy isn't growing
First, we’re back in recession – the much talked about double-dip.
Having only staggered back into growth in January 2010 following 18 months of recession, last month’s figures from the Office for National Statistics show that the UK economy has contracted for the last three consecutive quarters, dropping a huge 0.7% in the three months to June.
And according to the Bank of England, it doesn’t look like things are going to improve anytime soon.
Just this week the Bank of England hacked back its forecast for economic growth this year from 0.8% to zero per cent. Its medium-term growth forecast, meanwhile, was similarly cut from 2.6% to roughly 2%.
Or as Bank of England governor Mervyn King put it 'unlike the Olympians who have thrilled us over the past fortnight our economy has not yet reached full fitness'.
In a desperate attempt to boost the economy, the Bank of England has even hinted at an interest rate cut from the current record low of 0.5% – which would be exceptionally bad news for savers who have already suffered over three years at this low level. Experts also expect the bank will be forced to extend its quantitative easing programme beyond £375 billion.
2. Inflation is still above target
Inflation might have fallen to its lowest level since November 2009 but at 2.4%, as measured by the consumer prices index (CPI) in June, it is still above the Bank of England’s target of 2%.
However, given CPI was at 5.2% in September last year, 2.4% is a marked improvement and will go some way to help people struggling to protect their income against the eroding effect of inflation.
RPI inflation – which takes into account housing costs – meanwhile is still 2.8%, down from 3.1% in May.
3. Lenders aren't lending
Before the financial crisis credit was dished out like cheap candy, now it’s held back as though it’s ambrosia – food of the gods rather than that horrible rice pudding for those who didn’t do Classics.
Lending to small and medium sized businesses has fallen consistently since mid-2009, while a lack of mortgage finance has kept many would-be home owners locked out of the property market and stuck renting.
More about this:
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