The Royal Bank of Scotland guarantees that it will not repossess properties belonging to owners who have fallen behind on their payments for at least six months.

RBS are currently the fifth biggest mortgage lender in the UK, with a 7% market share. Therefore, their decision could put pressure on HBOS, who are currently the biggest mortgage lender.

The government have recently also bought out a 58% stake in the Royal Bank of Scotland recently after shareholders held a meeting and decided to take the government money, and therefore bought out a tiny percentage of the shares offered to them.

RBS have said that it wants to make sure customers are given an opportunity to seek help and independent advice before starting legal action against them.

Craig Donaldson, the RBS’ managing director of retail banking has said: “we fully understand that one of the biggest worries facing homeowners in financial difficulty is the thought of losing their home, and this is especially true given the current economic climate.”

Citizens Advice and charity Crisis, who represent homeowners struggling to keep up with arrears, have welcomed the news.

Just last week, Ian Pearson, Treasury minister, said that he would hold banks’ “feet to the fire” in order to assure that customers were treated properly.

Shortly after the RBS made this announcement, the Bank of England released figures that showed mortgage approvals had dropped again in October of this year by around 1,000 approvals less than in September.

BBC business editor, Robert Peston has said:” Here’s the positive side of what Royal Bank has done : it gives those who lose their jobs in the looming wave of redundancies a better chance of getting a new source of income in time to prevent the bank seizing the family property.

“But there is a cost, which will fall on estate agents and – possibly – anyone interested in seeing an end to savage deflation of house prices.”

Initial assumptions were that the delay in repossessions was due to the government take over, but it may not be entirely down to that.

Jonathan Charley, from EDS consultants, has said: “At a time when house prices are falling, banks don’t really want to do repossessions because all they end up with is no money coming from the mortgage loan and they end up with a stock of houses, which they probably can’t sell.

“So, for most banks they’d rather avoid having repossessions and actually just get some form of money coming in from people.”

The delay in bank repossessions for people who are struggling to keep up with their mortgage repayments is just one of many new changes being enforced by the bank. Others include an agreement to return to “normal” lending practices and guaranteeing overdraft rates and contracts for its business customers for at least a year.

Prime Minister Gordon Brown has pledged that the government will work hard to ensure that struggling high street store, Woolworths, will remain open over the Christmas period.

He also told reporters that plans were being discussed so as to ensure that employees currently threatened with redundancy will be helped to find more work in the future.

This comes shortly after the most recent blow that the chain of stores has had to deal with recently, as lottery operator Camelot stopped selling tickets to stores.

Camelot declares its decision to suspend trading with Woolworths will become effective immediately, “pending the company finding a satisfactory resolution to its current trading difficulties.”

This means that Woolworths will no longer be selling National Lottery Tickets, scratchcards or process prize claims.

The chain will now be staying open until after Christmas, but there is still concern for the 30,000 employees that the chain currently employs.

The Prime Minister has said that: “the important thing is in the long-run that employees in this company – where the businesses and the shops are not going to stay open in the longer term – can get other jobs quickly.

“That’s why we’re going to move in immediately to give advice to employees in the company.”

Deloitte, the accountancy firm that has been appointed the administrator for the high street chain, has said that it is searching for a suitable buyer for the stores.

Dan Butters from the administrator said that: “In the last 24 hours, we have received expressions of interest from a number of parties for both the retail and wholesale businesses.”

The company did try to sell itself to restructuring firm Hilco, which would have taken the firms debt, but this deal fell through.

Deloitte has promised that though things are bad, it promises that employees will get paid.

Currently, Woolworths has 815 stores and four distribution centres, which employ around 25.000 people. It also owns Entertainment UK, which supplies DVDs to supermarkets across the country, and employs around 5,000 people.

2 Entertain is currently jointly owned by Woolworths and BBC Worldwide. Woolworths is currently trying to sell its 40% stake in this venture to BBC Worldwide.

Woolworths is just one of a few high street stores currently struggling, and analysts predict that worse is to come.

An analyst at Hargreaves Lansdown Stockbrokers has said: “the eye of the storm has moves in from the banks to the retailers.”

Other struggling stores include: MFI, who have also gone into administration.

Computer and Technology outlets, Currie, and PC World DSG International are blaming “tough and volatile” trading environments for their “29.8 million half year loss.

Kingfisher has also claimed that their profits at B&Q had fallen 9%.

Some fear that the ending of Woolworths could spark a price war if administrators try to cut prices in order to move the company’s stock, which could then lead to worse problems for smaller, weaker competing stores.

The Woolworths chain is currently struggling under its £385 million debt.

Its biggest problems started after having to pay cash for goods from suppliers, after trade credit insurers were no longer prepared to insure the suppliers to Woolworths.

Ofgem have admitted that they may look into rising direct debit demands from energy companies, even though they have said there was “no quantified evidence indicating misuse of direct debit schemes”.

This comes even thought the company is denying claims from an MP that firms were raising their direct debit payments when customers are in credit to boost cash flow.

There is currently pressure on energy firms to lower their prices in the New Year, after they have been raised twice in 2008, and the head regulator of Ofgem has told MPs that he expects this to happen.

On average, a household’s gas and electricity bill rose by over £300 in 2008, but some direct debit customers of lenders say they have been paying more in recent months.

Millions pay their gas and electricity bills via direct debit and are therefore unclear as to how much exactly they are spending each month.

Peter Luff, Conservative MP and chairman of the Business and Enterprise Select Committee, has warned that several companies may be raising their direct debit payments even when customers’ accounts were in credit.

Earlier this week the Energy Retail Association denied all claims, saying that: “what energy companies are trying to do is make sure you get a balanced account that is zero or as close to zero as possible after you’ve had the biggest bill.”

After recent falls in wholesale prices of gas and electricity, energy companies have been pressured to lower their prices.

On Monday this week, Chancellor Alistair Darling acknowledged in his pre-Budget report speech, that there was concern that wholesale prices would not be reflected very quickly enough in household bills, announcing that Ofgem would produce a report every three months on any price changes.

He also announced that these reports would be used to govern whether there were unfair gaps in pricing between different payment methods.

Yesterday, British Gas announced that they would be narrowing the price difference between their pre-payment meter bills and other forms of payment, such as direct debit bills. This could lead to a £22 average cut in the yearly bill of a dual fuel pre-payment meter customer.

British gas electricity customers will pay the same as a quarterly cash or cheque tariff.

Alistair Buchanan, Ofgem chief executive has told Business and Energy Select Committee that regulator the company was putting as much pressure as possible on major gas and electricity suppliers to make announcements about their bills soon.

He also said that there was no evidence of any price-fixing cartel among the biggest suppliers, and that none of the major suppliers had dropped their prices recently after they put bills up earlier in the year in order to reflect wholesale costs.

The UK’s second largest energy company, Scottish and Southern Energy, revealed earlier this month that it was optimistic about domestic prices being cut in 2009 if the wholesale prices of gas and electricity continued to fall.

Much smaller company, First:Utility, has said this week that they will drop priced in response to the falling wholesale costs.

Chancellor Alastair Darling has revealed that while he may be planning on cutting taxes in his budget, the government will also be borrowing record amounts in order to reduce the effects of repression as much as possible.

According to his pre-Budget report, high income homes will also face more tax, and National Insurance contributions are also set to rise across the board, as part of his “exceptional” measures in order to reduce the effects of recession next year.

Alcohol, tobacco and duty prices are set to rise enough to offset the VAT cut from 17.5% to 15%.

Conservative Chancellor, George Osborne, has accused the Labour party of trying to bring Britain “to the verge of bankruptcy” as the plans detailed in the pre-Budget plan will double national debt, which is set to reach £118 billion next year.

He has accused the government of creating a “huge unexploded tax bomb timed to go off at the time of the next economic recovery.” And also that Mr Darling had offered “temporary tax giveaways paid for by a lifetime of tax rises on the British people,” and that the UK had been “mortgaged to bail out the mistakes of the past.”

Liberal Democrat treasury spokesman, Vince Cable has also said that the government’s plans would not be enough to boost consumer spending, and that they would do better to “put money directly in the pockets of low paid workers by cutting their income tax.”

Mr Darling has also reduced the predicted growth of the economy for next year from 2.75%, to between -0.75% and -1.25%, the biggest downward revision recorded.

On the other hand, he has said that the government will inject either £20 billion or 1% of GDP into the economy in order to get things moving again, leading to an increase in government borrowing.

There is also expected to be a cutback in government spending, with the rise predicted to be at 1.2%, lower than in recent years.

The 2.5% VAT cut will come into effect on Monday, just in time for the peak in the Christmas shopping period, and will aim to put £12.5 billion back into the pockets of consumers over the 13months during which it will last.

Also, on top of their £10 bonus, pensioners will receive a one-off payment of between £60 and £120 in January.

The increase in duty on alcohol, tobacco etc however, will be permanent.

In measures that aim to try and get back some of the VAT that the government will be losing, top rate tax will increase to 45% in 2011 for people earning over £150,000 per annum from April 2011, and all National Insurance contributions for both employees and employers will be raised by 0.5%.

The starting line for National Insurance and income tax line will be brought into comparison with each other so that anyone earning less than £20,000 per year will not pay more contributions.

In defence of borrowing rate being almost double for next year than 2008, the Chancellor has said that “in these extraordinary circumstances allowing borrowing to rise is the right choice for the country. Taken together these steps will ensure money flowing into the economy when it is needed most, but we can reduce borrowing when growth returns.”

Other measures include speeding up the introduction of planned rises in child benefits, along with measures that aim to help small businesses struggling due to the credit crunch.

He has also announced that drivers will face a more gradual introduction of new vehicle excise duty, at only a £5 increase per vehicle next year.

And, of course, there was mention of work on motorways, schools and repair to council houses by bringing forward £3 billion of state spending.

Also for home owners, a scheme that covers mortgage interest payments for those that have lost their jobs will cover up to £200,000 of mortgages.

The other major change in order to try to boost the economy is that this year’s £120 income tax personal allowance per year for basic rate tax payers will stay and be increased to £145.

The Council of Mortgage Lenders (CML) has revealed that the number of properties repossessed by mortgage lenders rose by 12% in the third quarter of the year.

It has also revealed that the number of borrowers in arrears went up by 8%, and the number of repossession orders made by courts in England and Wales rose by 3% compared to the second quarter of the year.

The figures suggest that things are set to get worse, with more people losing their homes as the country falls into a recession.

Margaret Beckett, Housing Minister, has said that “the Government is taking action to protest the most vulnerable families from repossession… [This includes] a new court protocol to make sure lenders are exploring all avenues before making a claim in the courts, a £200 million mortgage rescue scheme, more free legal representation in county courts, and more free debt advice.”

With interest rates falling, and unemployment rates rising, it is not surprising that so many people are struggling to make their mortgage repayments.

Director General for the CML, Michael Coogan has said that the company still predicts 45,000 repossessions this year, but that trying to predict numbers for 2009 was “premature”.

He also said that it was generally not in the lenders’ interest to repossess properties, and that the Chancellor’s Pre-Budget Report needs to address.
“Conditions in the wider economy suggest a worsening picture for mortgage lenders, however carefully lenders handle their treatment of borrowers in difficulty.”

The CML’s figures also suggest that the buy-to-let market has also become tougher in recent months as arrears for the landlords of such properties are now generally higher than mortgage borrowers.

The CML have explained that: “Reasons include falling rents and an over-supply of rental property in some areas, resulting in some landlords being unable to let their property or achieve high enough rents to support their borrowing commitments…Fraud is also likely to have been a contributory factor.”

Figures also showed that in the third quarter of the year, the number of people behind on their BTL loans were behind by 1.58%, compared to 1.44% of mortgages.

The number of landlords who saw their properties repossessed in the third quarter of the year however, was exactly the same as in the first two quarters.

The CML has warned that this lower BTL repossessions rate is “unlikely to be maintained”.

Also released today were the Ministry of Justice (MoJ) figures, which showed the situation earlier in the repossession process when lenders first go to court for permission to take back a mortgaged property.

Figures for England and Wales shoe repossession claims in the first stage of being processed were 1% lower than in the previous quarter, but overall, 9% higher than the third quarter of last year.

The number of court orders being made by county court judges was up 3% over the quarter, putting them 24% higher than this time last year. However, an agreement is often reached between the lender and the borrower, so many of these cases will not end in repossession.

Chief economist for the Royal Institution of Chartered Surveyors (Rics), Simon Rubinsohn, has said that he doubts that the number of repossessions has peaked just yet. He believes that claims will rise as people lose their jobs and buy-to-let landlords face rising mortgage costs and falling rents.

Even though the number of repossessions is rising, it still does not yet compare to the last property slump in the early 1990’s.

Chief executive of Shelter, Adam Sampson has said that: “lenders may claim they are using repossessions as a last resort, but they must not pat themselves on the back too soon as both repossessions and arrears are still continuing to rise.”

After a 16 year high, UK inflation fell in October, as oil and transport costs, as well as fuel prices, fell.

The Consumer Price Index (CPI), which was at 5.2% in September, has fallen to 4.5% in a month. According to the Office for National Statistics (ONS), this is the biggest month-on-month drop in 16 years.

The Retail Prices Index (RPI) also fell from 5% to 4.2%, its biggest fall since 2003. This index includes house prices, and is often used for agreeing pay settlements, or calculating the up rating of benefits like pensions.

Core inflation, which includes the likes of food, tobacco and alcohol, fell from 2.2% in September, to 1.9% last month.

The ONS has said: “The largest downward pressure on the CPI annual rate came from transport costs where the price of fuels and lubricants fell this year but rose last year… The decrease this year was triggered by a sharp fall in the price of crude oil.”

Other things that may have contributed to the decrease are the fall in prices of both air and sea transport, and from food and non-alcoholic drinks, as the prices of meat were cut in the supermarkets.

The UK economy shrank for the first time since 1992 this year, falling by 0.5% in the third quarter of 2008.

The Bank of England has said inflation could fall below its target of 2% next year, and could even drop as low as 1%.

All of this led to the Bank of England lowering its key Bank Rate in October to just 3% – its lowest level since 1955.

Chief economist at the British Chambers of Commerce, David Kern, said: “Following these [inflation] figures, it is clear that UK interest rates will be cut further, most likely to 2% in early 2009.
“One cannot rule out rate cuts below 2% later next year.”

The slowing UK economy is also pulling down cost-of-living prices, due to falling food and fuel prices. The fact that crude oil is remaining at under $60 a barrel is primarily responsible for decreased fuel prices.

Senior economic advisor to Earnest & Young ITEM Club, Hetal Mehta, has said: “With commodity prices falling and the economy shrinking fast, inflation is going to undershoot the 2% target by the middle of next year.
And while it is still unlikely on the CPI measure, the prospect of deflation cannot be ruled out.”

Figures from the ONS also show that output prices (the prices of food leaving the factory) dropped by 1% in October.

Input prices, on the other hand, (the cost of the raw materials bought by the manufacturer) dropped by 5.6% in October, the biggest drop in 12 years.

The Governor of the Bank of England, has admitted that it’s very likely that the RPI will reach negative percentages next year.

The Bank is also expected to drop its interest rates to 2% in December, its lowest level since the 1930s.

Although a short period of deflation would not be too bad, a prolonged period could be disastrous, as consumers hold off buying goods thinking they will be cheaper later. This can lead to firms selling less and wages being cut, and overall, less money to spend meaning demand falls even further.

The Bank of England is warning that Britain has probably entered a recession which is likely to continue well into 2009.

In the Bank’s Quarterly Inflation Report, it has warned that the economic landscape has dramatically altered since August, and it now predicts that the UK’s economy could shrink by a further 2% over the next year, and to sink to 1% by 2010.

Mervyn King, the Bank of England’s governor has said: “[It is] very difficult to know precisely how long we’ll be in recession…I think we probably are in recession now.
This is a difficult and unprecedented time, but we will come through this… We will come out of recession and get back to a period of low and steady inflation and economic growth.”

This comes after records show that unemployment has hit its highest levels in 11 years, while the value of the pound plummeted further on international markets.

The Bank’s central projection is for economy to contract sharply next year. This however, is subject to change if the government introduces further fiscal stimulus to the economy.

Ross Walker from the Royal Bank of Scotland has said that markets were surprised by how big the fall in inflation that the Bank of England had projected was, but he added that he believes: “conditions are going to get worse before they get better.”

Just last week, the Bank of England shocked the country by cutting its UK interest rates to 3%. Mr King said reasoning behind the sharp fall was “because the facts had changed”, and not because the Bank was caught unawares by the crisis.

If the Bank’s rates do fall below 2% as predicted, this will be their lowest rate of interest since it was set up in 1694.

Mr King also admitted that Retail Price Index, including house prices, could fall into negative percentages as interest rates fell. The fact that oil prices are still falling will not help matters. They are now well below $60, less than half the price it peaked at during the summer.

Charles Bean, deputy governor, predicts that the contraction of the economy should be similar to the recessions in Sweden, Finland and Norway in the 1990’s, which were quite short. He also emphasised that the government have responded relatively quickly to the threat, therefore the effects of the recession shouldn’t be extended too far.

Putting a positive spin on the 20% decline of the pound, he said it could help boost exports and pull the economy out of recession.

The governor pointed out however, that if the value of the pound falls much further, there could be further inflation in the future.

As part of its action against recession, the government announced it would spend billions to protect financial systems and boost the UK economy.

According to Mr King, there is stronger argument for fiscal stimulus than before, because the banking crisis meant that monetary policy was less likely to be effective.

However, he has also warned that any fiscal stimulus must be temporary and consistent with the long-term path of fiscal discipline, otherwise long-term interest rates would rise, undoing some of the effects of any economic increase.

Prime Minister, Gordon Brown has also said that he would have to employ “very special means to deal with special circumstances” and that the economic changes needed to be world-wide in order to be most effective.

It is thought more information on this will be included in the Pre-Budget Report, due out on 24th November.

Business group Deloitte has recorded that this Christmas people plan to fill their stockings a little less than usual as the average consumer plans to spend 7% less than last year.

The warning going out is that, this Christmas could be one of the toughest in decades for retailers, especially when compared to last year, where spending increased by 7%. This is according to Deloitte’s 14th annual Christmas Retail Survey, where 1,000 people across the country were interviewed.

The figures show that overall, 24% of customers in the UK plan to cut back and spend less this year on presents than they did last year. But it also showed that about 57% planned to spend about the same amount as 2007, and 19% expect to have to spend more.

The total average amount people predict they will be spending this year is £655. This is primarily on gifts, socialising and food and drink.

While the overall spending amount is set to fall by 7%, it is shown that the majority of this will be cut-backs in socialising – 12% less than last year.

More people are however, planning on buying some of their gifts at the supermarket, where the prices are competitively cheaper than the high street stores. 56% of people are planning on doing this, this year, compared with 52% last year.

Strategic advisor to the retail practice at Deloitte, Richard Hyman, has said: “I think the main headline is this is worst Christmas for a generation…But as a nation we’ll be spending £36 billion so it’s not a disaster.
“Broadly speaking, we believe sales will be flat this Christmas, with a slight fall possible.”

He added that retailers will be hoping that last week’s interest rate cuts will boost people’s disposable incomes.

Overall, 19% of adults have said that they plan to spend more this year, if you narrow the age gap to 16-24 year olds, 36% said they intend to spend more.

49% of 16-24 year olds said that they plan to have a good Christmas and “worry about the cost later”, a concerning amount.

Deloitte’s head of retail, Tarlok Teji, has said:” This age group has grown up in an affluent society with technology products and designer wear, are comfortable with debt, and have never been in a recession…Their high propensity to spend represents an opportunity for those retailers targeting younger customers.”

Prime Minister Gordon Brown has sparked talk of possible tax cuts by saying they could help support consumer spending. He also commented on the tax cuts that are planned in the US and Germany and said that countries must work together to tackle the global economic problems we are currently facing.

He has said that he is looking into “everything” that could possibly help the economy and would announce the details of the decisions made within days.

Conservative leader David Cameron has said he believes the Tories will announce “tax change to encourage businesses to take on workers”, and the Liberal Democrats have already admitted they would cut taxes for those that are paid less.

Gordon Brown has said that potential tax changes are a matter for the pre-Budget report, which is due out next week. But also said in a speech that “people are looking to governments for action” at the moment, drawing attention to the plans that Germany, the US and China have to help their economy, which mostly include tax cuts.

He said: “With Britain continuing to lead the debate, economic recovery will work better if we all work together…The benefits of any individual country’s fiscal action will be all the greater if this is part of a concerted and fairly distributed international response to maintain global demand.”

When asked about the possibility of tax cuts, Mr Brown replied that petrol duty had been frozen and people were already getting £120 back in their income tax after the government raised tax allowance following the 10p tax row.

“What I’m determined to do is get all countries around the world trying to get their economies moving again, and one way you can do that is by putting more money into the economy by tax cuts or public spending rises but that’s something we have got to look at in the next few weeks.” He told GMTV.

There have been reports that the Conservative party may propose National Insurance payments holiday for new workers in order to encourage employers to take on more staff, in their tax proposals.

Cameron has also warned against permanently damaging public finances, and is criticising the government because it had a large budget deficit before the recession even began. He has suggested that any new proposals should make clear where the money is coming from in the first place to stop the governments’ excessive borrowing.

On the other hand, spokesman for Mr Brown said that increasing borrowing is now the accepted view across the world, and that the government would have to look at all the issues relating to tax and spending.

Nick Clegg, Liberal Democrat leader, has said that they have been pushing for tax cuts for the middle and low income earners for months, adding that “We are the only party saying that tax cuts have got to be big, they have got to be permanent and they have got to be fair.”

He also said that in order to make the system fairer, “loopholes” that benefit only the rich on capital gains and tax relied on pension contributions had to be abolished, in addition to clamping down on tax avoidance and introducing more green taxes.

Ken Clark, the former Chancellor has been recorded as saying that previous efforts to boost the economy had failed and so it’s time for VAT cuts in order to encourage customers back into the shops.

Energy regulator Ofgem believes that over six million people who use pre-payment meters are being overcharged by an average of £320 a year. They also say that around 4.3 million customers not connected to gas supplies are forced into paying a £55 premium for their electricity.

The watchdog’s findings come after an eight-month investigation in to the energy market. Ofgem said that companies must address the problem as soon as possible.

A study last month by the National Housing Federation found that British Gas charges pre-payment customers as much as £567 more than its online direct debit customers.

Ofgem’s chief executive, Alistair Buchanan, said the findings were “not acceptable” and assured homeowners that they were “demanding change”.

“Initial findings from our energy market probe give us grounds to demand that companies end practices that hinder customers, especially the vulnerable, from getting the best deal,” he said.

Mr Buchanan promised that the watchdog was “putting on the regulatory hobnails” and warned that “if the companies don’t sort it out, we will”.

“If they fail to satisfy our requirements voluntarily then we can move to a Competition Commission reference,” he said.

The National Housing Federation study estimated that the “pre-payment penalty” adds up to more than £1.35 billion each year for the power companies.

Despite promises to take action, made by Gordon Brown and Alistair Darling, energy companies are still over-charging a penalty of £113 million every month, claims David Orr, the Federation’s chief executive, who described the practice as “outrageous”.

Mr Orr said, “The fact that prepayment meter customers are facing yet another winter of having to pay through the nose for their energy is unacceptable and ministers must now show some backbone and stand up to the energy fat cats,” Mr Orr demanded that the companies equalise the charges immediately.

The watchdog was particularly concerned about the companies’ failure to offer competition to the 4.3 million customers with no access to the gas mains, as many of them live in rural areas. Ofgem said that these customers were disadvantaged as they have very few options, which forces them to stick with more expensive electricity deals.

The watchdog said that “electricity only” customers “are far more likely than others to be fuel poor”, meaning 10 percent of their income goes on fuel bills. Under half of these customers (44 percent) have ever switched power suppliers, compared to 57 percent of consumers who have access to both fuels, it found.

Ofgem found no evidence that energy firms had been working together as a cartel to set prices. Its inquiry was launched in February after all the leading suppliers raised their prices at roughly the same time.

Mr Buchanan believes competition is healthy, and said the energy companies need to show customers the benefits of competition.

“We have to make sure the companies don’t get sloppy,” he said. “At times we have to give competition a nudge along the way, and that’s what we’re doing.”

The regulator also made a promise to be tougher on firms who exploit consumers through doorstep selling. It will now consult with the industry on its initial findings until December.