Finance - Credit crunches further
WORKERS, JULY 2009 ISSUE
The supply of credit has fallen to its lowest level since June 2000. Gross new loans to firms fell to just £7.9 billion in May, down from £9 billion in April and £12.6 billion in March. The banks have used our money to improve their profit margins and rebuild their capital positions, not to help to rebuild the economy.
Construction output fell by 9 per cent in the first quarter, much more than an initial estimate of 2.4 per cent. Officials from the Office of National Statistics said that “all things being equal”, this could suggest the economy shrank 2.2 per cent in the first quarter.
Export orders have not risen, despite a 20 per cent fall in the pound’s value. Retail sales volumes in May were 0.6 per cent lower than in April and 1.6 per cent lower than in the same month a year ago. Mortgage lending fell by 58 per cent from this time last year.
The public finances are worsening all the time. May saw the largest monthly government borrowing in history – £19.9 billion. The total outstanding government debt has risen to £774.8 billion, £150 billion more than one year ago, equal to 54.7 per cent of our GDP.