All parts of the media seem to be obsessed with debt. We have heard reports that the US is struggling to adopt any form of proposal to reduce the level of its national debt.
Across the Channel, there are agonies being experienced within the eurozone as policymakers seek to balance the books in Greece by imposing similar levels of economic prudence in Southern Europe to those adopted by Northern members, most particularly Germany. UK politicians are rather smugly sitting on the higher ground claiming that our deficit is under control and that “a reasonable level of growth” is all that is required to put things back on track.
That may be so but perhaps it is only half the story. Public sector spending still has some way to go and the mantra “we are all in this together” is not helped when even in a period of frozen salaries, it is revealed that authorities are continuing to pay annual service increments. In addition, in some sectors, strong unions are still able to extract increases backed by the threat of industrial action.
Low interest rates are obviously a benefit for borrowers and they may help the financial sector but they are significantly damaging to those with savings and discourage people from making pension provision. For those with a pension pot, now is not a great time to retire as annuity rates are very disappointing.
After many years of the Government encouraging as many school-leavers as possible to take advantage of a university education, the immense cost to the exchequer has been fully understood. In most parts of the UK, new schemes are being introduced to transfer the cost from “pay today” to “pay later”, with the cost of university fees being met either by the students themselves out of future income or by the state in 30 years. Many students feel aggrieved by this change in policy and are nervous of the prospect of graduating with perhaps a minimum of £50,000-worth of debt.
It will be interesting to observe the impact on student numbers in future years. Well-established universities may find a significant number of students willing to pay their fees but this may not be the case for all institutions, nor for all the courses available.
Even an optimistic view would suggest that the end result of the new arrangements will be that more school-leavers will seek immediate steps to start their chosen career and will be looking to acquire the professional qualifications that will support them in their chosen sphere.
Potential employers have recognised this and even firms which have focused on the university milk round are now actively promoting alternative routes.
Financial services was seen as an attractive employment sector but this is now not so much the case. However, the best brains are still required and firms in all sectors need to be active in promoting what the sector has to offer. Over time, banking and insurance has a strong record of offering all the elements to equip new entrants, to provide products and services essential to a modern economy and to meet the varied financial needs of clients.
Richard Fox is chief executive of the Society of Mortgage Professionals