The National Institute of Economic and Social Research, NIESR, has predicted that the recession will continue for a while yet, and that it may take as much as five years before we see the standard of living return to the level that it was in early 2008.
The news from the leading think-tank caused concern amongst debt advice specialists. They are predicting an increase in the number of people falling into financial difficulty, and in need of financial help programmes such as a debt management plan, or an IVA, Individual Voluntary Arrangement.
The NIESR have estimated that the economy will contract by around 4.3% this year, before growing by 1% during 2010, and a further 1.8% in the year after that. This prediction falls in line with their earlier estimates; however the forecasts now show a slower rate of economic recovery than previously.
Since the start of the recession, last year, a lot of consumers have found themselves in severe financial hardship, with many seeking debt advice in an effort to get out of trouble. The news that the recovery is going to take many years is going to hit hard-up consumers hard.
It’s not just the public that have a debt problem. Government borrowing is expected to reach £165 billion this year, and total borrowing has reached nearly £800 billion, which is the highest level since records began. The only way the national debt will ever be repaid is though large tax increases and stringent cuts in public spending.
Whatever happens, it would appear that the next few years are going to be a tough time for both the people of Britain, and the ones that are in charge.
And as if that wasn’t enough, the NIESR are predicting that unemployment will continue to rise this year and next year. The peak is forecast to come in mid 2011, when nearly 10% of the available workforce will be without a job.
