A decade on from the financial crisis and millions of people are still suffering from the consequences.
A report from price comparison site GoCompare has found that nearly half of Brits (46%) feel worse off now than 10 years ago.
Meanwhile, a quarter (25%) of people are worried that another economic crisis would put them in serious financial trouble.
One in three people (30%) are also concerned about an inability to save. This is particularly pronounced in the younger generation who have already been warned they’re not saving enough and that their financial resilience due to having debts is a serious concern.
In addition, a mere 16% of people feel secure in their jobs, despite record employment. Plus, with inflation currently at 2.6% many people’s salaries are not rising at the same pace, effectively reducing how much their earnings are worth each year. To make up the difference, worryingly some people are borrowing their way to a better lifestyle funded by cheap credit.
Matt Sanders from GoCompare comments: “August 2017 marks a decade since the start of the credit crunch – the worst financial crisis since the Great Depression. And, from our study, it’s clear that many people are still feeling the effects of the worldwide economic meltdown and are ill prepared for another crash.
“Inflation is back and set to make things worse for households on a fixed income. Car insurance and energy bills are two areas where costs are rising rapidly at the moment. But they are also two of the easiest products to shop around for and, as a result, households can make significant savings by switching.”
Financial institutions are still paying for their mistakes
But it’s not just consumers who were affected by the crash. The financial institutions that sparked the worldwide economic meltdown in 2007 are still paying for their mistakes to this day. Earlier in July, RBS reached a settlement with the US Federal Housing Finance Agency to pay $5.5 billion to have further litigation against the bank for its actions before the credit crunch began dropped.
RBS issued approximately $32 billion worth of mortgage-backed securities in the lead up to the crisis to US housing agencies Fannie Mae and Freddie Mac, a not-insignificant contribution to the debt bubble that burst unceremoniously 10 years ago. The bank was recently voted the least trustworthy provider for the fourth year in a row by Moneywise users.
Laith Khalaf, senior analyst at Hargreaves Lansdown says: “10 years on from the financial crisis, RBS and the UK taxpayer are still counting the cost of the bank’s former misdemeanours. RBS has to swallow this medicine in order to return to good health, and this latest settlement represents a major milestone in what has turned out to be a very long journey.
“The bank is still of course largely owned by the UK government. RBS shares are currently trading at around half the price the taxpayer needs to break even on the bailout, which means a return to private hands is still a long way off.”
Lessons not learnt
GoCompare’s research also found that two fifths of people in the UK don’t believe the country has learnt the lessons of the last crisis. One third of people believe that financial institutions are still to blame as they encourage people to continue to borrow at unaffordable levels.
This is an issue the Bank of England has recently warned about.