What’s it like to live in Europe today? Here’s some anxiety provoking warnings. Sound similar?
Economic instability in the eurozone has affected the lives of millions of people on the continent. As uncertainty continues, and the wounds threaten to get deeper for the single currency, the pain will be felt in the UK too.
How will that affect you? What does it mean for your chances of getting a job, a mortgage or a decent pension?
Homes and mortgages More upheaval in the eurozone would mean banks were likely to take a more cautious approach to lending money, in part because they would not have as much to hand out. That could mean even tougher conditions for first-time buyers, who will again require a large deposit to secure a mortgage – perhaps about 20% of the value of the home they want to buy. Some may not want to buy anyway at a time when their jobs could be at risk. Fewer first-time buyers mean more tenants – and rising rents.
Pensions As with housing, pensions would be affected by the UK being seen as a safe haven amid eurozone turmoil. Pension funds are big investors in UK government bonds. If the cost of buying them rises, and the return on holding them falls, pension funds would not be in such a healthy position. That might mean more businesses closing their final-salary pensions – the most generous workplace pension schemes – to new or existing staff.
Outlook for jobs
The eurozone is the UK’s biggest trading partner. Official statistics show that nearly 47% of UK exports went to the eurozone in 2011, while nearly 43% of UK imports came from the eurozone. A long-term spiral of decline in the economies of Europe would mean less demand for UK good and services, and that could mean job cuts, especially in manufacturing. Governments have been pushing for a growth agenda, but eurozone uncertainty leads to a lack of confidence among businesses. That means a pause in new investment and new jobs, most notably for younger workers.