More than a decade has passed since the financial crisis that crippled the UK. In the meantime, banks and lenders across the country have been working tirelessly to regain their strength and positioning. Lloyds Bank recovery and Bank of Scotland debt recovery initiatives have been well publicised, but where exactly do we stand right now?
Have post-recession recovery efforts reached their objectives? Or are the scars of the recession still visible across the UK economy?
The UK’s recovery from recession
The truth is, the answer lies somewhere down the middle. In terms of recession recovery, the UK has experienced an impressive eight years of solid growth since the height of the crisis. In addition, employment levels have repeatedly hit record highs along the way.
Nevertheless, this doesn’t mean the UK’s recovery from the recession is complete. Some facts and figures still make for less than reassuring reading, despite evidence that things are at least heading in the right direction.
Wages
For example, average wages are no higher today (in inflation-adjusted terms) than they were 14 years ago. Promises have been made by the Bank of England to continue improving wages for UK workers, but annual increases of around 2.5% pale in comparison to the 4% annual average prior to the financial crisis. So while progress has been made, there’s still a long way to go.
Productivity
The stagnation of productivity in the UK has proved particularly problematic and stubborn over the past decade. In fact, productivity growth since 2008 has trudged along at its slowest pace in almost two centuries. Economists point the finger at low interest rates, poor management, and a lack of investment. problems that continue to hang over the British economy today.
Housing market
Steady growth in housing market activity has helped many banks and lenders repair at least some damage brought about by the recession. Once again, however, things are still performing at an exponentially lower level than prior to the crisis. For example, mortgage approval volumes are still down around 40% compared to a decade ago, with minimal inventory contributing to average property price increases of 17%.
Government debt
Extensive efforts have been made to bring government debt under control, which exploded wildly in the months and years following the crisis. A decade of frugality and budget cuts have made a dent, but there’s still a glaring gap between government spending and tax revenues.
EU withdrawal
Last but not least, nobody has any real clue as to the possible implications of the UK’s exit from the European Union. an issue that is currently affecting every aspect of the British economy. From house prices to interest rates to personal and business borrowing, people are more cautious about their financial decisions than they’ve been in some time. Some of which is playing into the hands of banks and major lenders, some prolonging the recovery process and prompting fears of another economic crisis.
For more information on the current state of the UK banking sector or to discuss our services in more detail, contact UK Property Finance for an obligation-free consultation.