So we’re over a year into the credit crunch now and heading into what some are calling a full blown recession.

I agree with them!! Already we’ve seen many mortgage lenders close their doors forever or cease lending completely, and the interbank lending has all but ceased too. So what is likely to happen over the next couple of years?

Well I’m no authority on how the economy will evolve but I do suspect it will get worse before it gets better. Watching the news last night (or it may have been the one show I can’t remember exactly) it was suggested that the so called recession we are entering may be more akin to a ‘V’ rather than a ‘U’. By that they mean a very quick ‘in and out’ recession and nothing drawn out like other recessions. This might well be true but let’s remember then that the banks problems started over a year ago and consumer lending virtually came to a halt in or around March this year.

That was followed by the the knock on effect of building sites closing down and the employment sectors within the associated trades began to decline. As far as I know, I wasn’t aware that the retail sectors were really affected yet, which would kinda run true when you look at the latest inflation figures of over 5%, so as we hear of these rises in unemployment (currently at their highest levels since the mid nineties if I remember correctly) what will come in the ensuing months when people stop spending on the high street.

Well, it’s a snowball effect that hasn’t even started yet. As you’re reading this you probably haven’t given too much thought as to what will happen so let’s start with Christmas, where I’m sure we’ll all go out, as usual, and spend like crazy trying to make our loved ones happy. No doubt the majority of us will put this spending onto some form of plastic with a view to paying it back in the new year.

Come February, when all the bills are well and truly in we’re likely to stop spending on luxury items, which will include going to the pictures, going out drinking, buying new clothes, and generally having a life. This is when the high street and retail trades will be hit and as such when the recession begins to make its appearance.

It isn’t always the best thing to take out a consolidation loan or mortgage for such occurencies so if you have debts owing to a number of creditors then perhaps it would be wise to speak with a specialist debt adviser.