German government efforts to support the economy through record borrowing may aggravate a shortage of funding for the private sector which threatens to crimp investment, accelerate job losses and stifle a recovery.
German industry associations say banks’ reluctance to lend is putting firms under increasing pressure to find alternative sources of funding — at a time when governments are sucking up more and more of the money available on capital markets.
Yet the more companies have suffered in the downturn, the more the state has had to borrow to help them out.
“It’s a vicious circle — it’s like a dog biting itself on the tail,” said Volker Treier, chief economist of Germany’s chamber of industry and commerce (DIHK).
Germany and other European states are selling record levels of debt to help shore up their economies, prompting the Bank for International Settlements to warn this spring that sovereign issuers alone face increasing competition for investors.
Treier said there was no definitive evidence yet that firms have been crowded out of capital markets by the government, which is battling an expected economic contraction of 6 percent in 2009. But there were signs it could be happening, he said.
For the first time, DIHK surveys of German industry showed that financing conditions for bigger firms — those most likely to seek funds on capital markets — were deteriorating more rapidly than those for smaller firms, Treier said.
Yet this in turn could have a knock-on effect for borrowers who cannot turn to capital markets for funding.
The European Central Bank has pumped billions of euros into markets to encourage bank lending, but it hasn’t solved the problem, said Mario Ohoven, president of the BVMW association of small- and medium-sized businesses, known as the Mittelstand.
“The situation has got worse,” Ohoven told Reuters. “We know from our members…that more than 40 percent of Mittelstand firms are reporting tougher access to credit.”
According to the Bundesbank, the volume of loans issued by banks to non-banks fell during four of the past five months up to March, the most recent period for which data is available.

Read More: http://www.guardian.co.uk/business/feedarticle/8528054

The Office of Fair Trading has warned 10 firms to stop making unsolicited and misleading calls to advertise services.

The six debt management and four cold-calling firms were told they could face formal action if they failed to stop.

It came after the trading watchdog and the Information Commissioner’s Office received a large number of complaints about the firms, which cannot be named.

The OFT said it was “completely unacceptable” for companies to take advantage of people with debt problems.

Read the rest of this article at: http://news.bbc.co.uk/1/hi/business/8066253.stm

The dollar on Thursday plunged to its lowest level this year against a currency basket and the euro neared a five-month high above $1.39 as fear of widening U.S. deficits soured investors on dollar-denominated assets.

People located in rural and industrial heartlands across the UK are likely to require debt management solutions following revelations that these regions are among the worst hit by the recession.

Since its arrival on the shores of the country a few months back, the credit crunch spread its wings across the nation and mutated quickly into a global financial crisis that has now morphed into one of the worst recessions in recent times.

The crisis has resulted in a decline in property values, throwing thousands into debt with negative equity and massive redundancies as companies either laid off staff or buckled under the pressure.

According to data from consumer website uSwitch.com, Swindon is the hardest hit area because over the last 12 months the town has been “hammered by a 16 per cent drop in house prices and soaring unemployment”.

During this period, unemployment in the town has risen faster than any region in the country, with the number of people claiming job seekers allowance jumping by a staggering 197 per cent.

Read More:  Rural town residents could require debt management solutions

For more information on debt management solutions, including debt consolidation and IVAs, Visit www.thinkmoney.com

When a homeowner faces the threat of repossession, finding a way to make those monthly mortgage payments jumps to the top of their priorities list. Their first port of call should really be their mortgage lender, who may let them reduce or reschedule their payments until they can get their finances under control again.

There are, however, other places they can turn to. Often, people can’t pay their priority bills (such as their mortgage) because their non-priority bills (credit cards, personal loans, overdrafts, etc.) simply take up too much of their monthly income. In cases like this, they may have a wide range of debt solutions available to them, from debt consolidation to IVAs (Individual Voluntary Arrangements).

Helping them reorganise their non-priority payments, these debt solutions can free up the money they need for their mortgage payments. Different debt solutions are right for different people, so they should start by seeking debt advice from a professional debt specialist, who can help them decide which debt solution (if any) is right for them.

Debt consolidation
A debt consolidation loan may be a simple idea, but it can really help people with multiple debts. If they take out one new loan that’s big enough to pay off all their unsecured high-interest debts, they’ll have just one repayment to make per month, rather than many. This can greatly simplify their finances as well as reducing the interest they’re paying on their debt.

A debt consolidation loan can be an effective way for someone to reduce the amount they have to pay every month, as they can arrange to repay the consolidation loan more slowly than the original debts, although this could well mean they end up paying more in total.

Depending on their situation, they might consider consolidating their debts by remortgaging – taking out a larger mortgage and using the cash to pay off their unsecured debts. Even if this increases their mortgage payments, it can still reduce their overall monthly expenditure, as they won’t have to make any payments to other debts. Of course, it’s always important to think carefully before securing any debt against property.

But debt consolidation isn’t always the best way forward, and some people may be better off with an alternative debt solution, such as a debt management plan – or an IVA.

IVA (Individual Voluntary Arrangement)
For homeowners with significant debts (over £15,000, in most cases), an IVA could be a good way of reducing their monthly payments, freeing up cash for mortgage payments and writing off a portion of their debt. Normally lasting five years, an IVA is a legally binding agreement between an individual and their unsecured creditors:

· The individual agrees to make regular fixed payments throughout the IVA – basically, the maximum they can afford once they’ve taken their living expenses into account. They may also have to free up some equity in their home towards the end of the IVA, so they can pay their creditors more of what they’re owed.

· If enough of the creditors accept the terms, they’ll agree to write off any outstanding debt once the IVA has been successfully concluded. They also agree not to take any (further) legal action, as long as the individual keeps making the payments.

An IVA is only an option if the individual genuinely can’t make their normal payments to their unsecured creditors – but can commit to making those reduced payments for the duration of the IVA.

Read more about debt consolidation loans & IVAs at Debt Advisers Direct

Article Source: http://EzineArticles.com/?expert=Melanie_Taylor

If you have several debts you are looking to repay, a debt consolidation remortgage could be the answer. It allows you to consolidate your debts as part of your mortgage terms – effectively adding your debts to your mortgage. It also enables you to repay the debts over a much longer period than an unsecured debt consolidation loan, or other debt solution, making repayments cheaper (although repaying what you owe over longer could mean you pay more in total.)

Will I be able to get a debt consolidation remortgage?
It’s been well publicised over the past year that mortgages are harder to get than they used to be – a 10% deposit is all but a necessity, and lenders are being stricter about their lending criteria than in recent years.

Because they involve paying back both your mortgages and your debts, debt consolidation remortgages can be a little harder to obtain than regular mortgages. But with a sufficient credit rating, adequate deposit and a proven ability to repay it (i.e. good earnings), it’s still quite possible to get a competitive deal.

As debt consolidation remortgages rely on equity withdrawal, the amount of equity you have tied up in your home will also affect your ability to obtain a debt consolidation remortgage, and how much more you can borrow to pay off the debt.

Your equity includes any deposit paid on the house, any repayments you have made and any increase in your home’s value – essentially, it is the proportion of your home that you actually own. The more equity you have, the more equity you have the potential to withdraw – plus your lender will be more confident in your ability to repay.

Will it be affordable?
This really depends how big your debts are – i.e. how much extra you need to borrow. For example, if you have a mortgage for £100,000 and want to consolidate £50,000 of debts, you can expect your payments to go up by 50%. Consolidating £8,000 of debts on a £150,000 mortgage, on the other hand, would be much more affordable. If you are unsure whether your debts are too big for a debt consolidation mortgage, or want to know about other possible debt solutions, talk to an expert debt adviser.

Interest rates
Debt consolidation remortgages are offered at the same rate of interest as a regular mortgage – the only added expense will be the extra you borrow to pay off the debts you have consolidated into the mortgage.

This will vary depending on your circumstances: if the homeowner has a poor credit history, the interest rate is likely to be a little higher. Since the interest rate applies to the whole mortgage, not just the other debts, this could add up – so it is important to make sure you can afford the monthly repayments if you are going to take this route.

Article written by http://www.debtadvisersdirect.co.uk

THE SNP spent in excess of £1 million more on campaigning than Labour last year, it was revealed yesterday.
Details of the parties’ accounts for 2007, published by the Electoral Commission, showed that the SNP spent £1,676,223 on campaigns last year. That compares with the £638,014 Labour in Scotland spent on its campaign.

The SNP accounts showed the party’s income last year was £2,562,970. But it spent more than that, with expenditure amounting to £2,803,560 – leaving the Nationalists with a deficit of £240,590.

The Labour Party across the UK cut its debt by more than £6 million to £18.9 million last year. Labour made a £7.51 million operating surplus last year against an £814,000 deficit in 2006.

Jack Dromey, Labour’s treasurer, said the party had shown “a new discipline of approach” and a determination to “live within its means”.

The Conservative Party reduced the amount it owed from £9 million to £7.75 million, while the Lib Dems ended the year £1.3 million in the black.

The Tories recorded a £1.57 million surplus, down from £4.2 million. The Lib Dems recorded an operating deficit of £366,677, compared with a surplus of £1.18 million in 2006.

The commission’s chief executive, Peter Wardle, said inconsistency between the parties’ presentation of their accounts made comparisons difficult.

He said: “The commission is consulting on prescribing regulations that will set out how accounts must be presented with more consistency and transparency.”

The accounts for the SNP also showed the party’s membership in 2007 was 13,944 – an increase of almost 50 per cent from 2003, when it was 9,450.

SNP in debt: Original < here >