I’m reporting this week from the Eastern front of the euro-zone meltdown, where an unfolding banking and confidence crisis could be signs of far worse things to come.
It’s hard to believe it was almost one year ago today, that here in Estonia, the small Baltic EU nation I call my second home, we accepted the euro as our primary currency.
Twelve months ago the changeover from the kroon to the euro was heralded with enormous fanfare and celebration, and a great deal of hope and hype. Parades, festivals, PR campaigns, free euro coin holders were everywhere I turned. However, many people back then also had underlying fears of the change too.
And it seems those fears were more than valid … they were prescient.
Be Careful What
You Wish For
Estonia had imposed strict self-austerity for a number of years to attain the “privilege” of adopting the euro as its currency. As a resu
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Price has been an important factor in buying decisions ever since the recession in 2008. However, selling solely on price has large disadvantages for merchants, not the least of which is reduced profits. This year, merchants have taken to offering huge deals early and often in a bid to get shoppers into their stores. That strategy has paid off in more sales, but now consumers are starting to expect these deals and are becoming resistant to paying full price.
Finding the Best Deal
Consumers are now almost hardwired to look for the best deal. They’ve pulled out all the stops from camping out at their favorite stores the night before a Black Friday sale to using cell phones to compare prices before actually making a purchase in-store. Stores have gotten very creative at generating consumer interest, but it almost always has to be attached to a very, very, low price. H
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The Bank of England confirmed yesterday (Thursday 8th December) that the base rate of interest for loans and savings would be kept on hold for another month at the historically low level of just 0.5 per cent.
The announcement was made following the regular monthly meeting of the Bank’s Monetary Policy Committee (MPC) and came as absolutely no surprise to financial experts and borrowers with home owner loans alike.
Earlier this month, the Bank announced that it expected the base rate for loans and savings to remain at its current low level for the foreseeable future, as the UK economy was in no position to support a rate rise at the moment and any such rise could have disastrous consequences for both the economy and consumers with variable rate home owner loans, many of whom are already struggling even with their current cheap loan rate.
The MPC also decided to leave the current programme of quantitative easing at its current level of £275 billion, although the committee said that this would be kept under review and many experts are expecting a further expansion of the current programme early in the New Year.
The announcement will, of course, come as good news and a welcome Christmas present for the millions of borrowers with a variable rate home owner loan, who are still enjoying the benefits of a particularly cheap loan, although borrowers should take advantage of these savings to overpay on their loan and reduce the balance for when rates do eventually increase.
David Kern of the British Chamber of Commerce said “The decision by the MPC to leave interest rates unchanged was widely expected. Howe
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— Jonathan Langham @ 5:38 pm — 
December 29, 2011