What happens if interest rates fall to 0%?
We have the potentially intriguing situation which could see UK base rates fall to 0% in the short to medium term as the government tries ever harder to refloat the UK economy. But if rates do fall to 0% where does this leave the financial sector? Savers? Mortgage holders?
A fall to 0% is something which has never been seen in the modern era and something which would be a drastic measure in itself. However, there is a chance this could happen as more and more interest-rate reductions have less and less of an impact on the UK economy as a whole. A reduction to 0% would severely reduce finance costs for the banking sector with the potential that this would release massive liquidity injections for consumers to use to tackle their financial difficulties.
A fall to this level would also see businesses able to borrow money at a rock bottom prices in order to replenish and rejuvenate their operations and balance sheets which should in due course induce more confidence into the employment market which would then filter through to the consumer. The ultimate aim is to increase consumer spending which will then see business levels expand and hopefully pull the economy out of the current slowdown.
Share this..
Related stories
Are we really bothered what the fat cats earn?
As the UK government appears to be edging closer and closer to revealing the most private financial details of non-board members in the city of London, many are starting to ask the question, are we really bothered what the fat cats earn?
The bottom line is that each and every person in the UK is well aware that those in the top league of the UK financial sector attract the multi-mil...
Will the return of stamp duty kill the housing market?
The stamp duty holiday for the UK housing market is set to end on 31 December and there are concerns that early 2010 could see a slump in demand and a slump in prices across the UK. There is no doubt, as with the UK car scrappage scheme, there has been significant manufactured demand in the UK housing market primarily because of the extended stamp duty holiday. But is the UK property market able t...
Read MoreHow do you tackle your debt issues?
The vast majority of people in financial trouble across the UK will have mortgage debt, credit card debt, loans outstanding and other overdue payments. While it can be very difficult to know exactly where to start when tackling these problems it is essential that you protect your home first and then look to pay off the higher interest debt.
If you're up-to-date with your mortgage pa...
UK government figures show 562,000 job vacancies
As the unemployment rate in the UK continues to push higher and higher there is some concern about the quality and accuracy of the figures released into the public domain. It would appear, according to government figures, there are currently 562,000 job vacancies in the UK and while the number has fallen by 49,000 in the last quarter and 118,000 over the last 12 months this is still a substantial...
Read MoreHow could we have avoided this latest economic slowdown?
As the slowdown spreading across the worldwide economy continues to bite deeper into each and every country many people are starting to ask what could have been done differently, how could we have avoided these troubles and more importantly who is to blame?
The fact is that we are all to blame in a small way because we as consumers led the credit based spending spree, we pushed hous...