With alarming headlines circulating around the country about the economic downturn in the UK, everyone is very concerned about their own financial situation close to home.

How has the credit crunch affected the UK? According to the BBC, from June 2007 to June 2008, food prices rose by 10.6%, petrol prices rose by 24%, whilst house prices went the other direction, down 8.1%. Among the key food items, milk and bread rose by 13%, cheese rose by 16%, whilst eggs jumped by 33%. In the housing market, the Communities and Local Government have confirmed that house prices are 0.3% lower than a year ago, but according to Graham Beale, the head of Nationwide building society, house prices might have dropped 25% from its peak (Autumn 2007). The sub-prime crisis in America certainly had an effect on the UK housing market as the low number of mortgage approvals show. Mortgage approvals have dropped from 58,564 in 2007, to 21,086 in 2008. The UK is now experiencing zero growth, and with the global economy looking grim, the UK may enter recession soon.

So how did the credit crunch affect Oundle and Northamptonshire on the whole?

Norman’s and Aldi

With many residents in Oundle not willing to spend as much, most shops in Oundle would have a drop in sales. For example, Norman’s is having problems coping not only from the credit crunch, but from a shortage of supply from local farms.

As Phil Norman, current owner of Norman’s, said, ‘Places like Russia are importing huge amounts of fresh produce and that’s leaving the markets here very short, pushing prices up.’

Many shoppers residents in Oundle would be turning to value supermarkets, like Aldi and Netto, as they look to cheaper alternatives. As a result, value supermarkets have experienced an increase in sales.

Nadine Weise, Aldi area manager, is in charge of four Northampton stores said, ‘Business has increased by about twenty percent, and we have a lot of new customers.

‘Judging by the feedback we get from our customers, our products say a lot of things are so much cheaper than a lot of other retailers.’

Regional figures showed a growth of 19 percent in the last year, whilst Netto sales have gone up by 11%. With constant price deals being introduced, and the economy still looking grim, value supermarkets could see even higher growth and sales in the months to come.

Fairline

One of the unique industries that is based in Oundle is Fairline Boats. With relatively good sales at the Cannes and Southampton Boat Shows, the business credit crunch has certainly been affected by the downturn since then. At the end of September, Fairline Boats announced that it will cut 90 jobs. It was thought that most of the jobs cut would be cut from the production line, with some backroom positions in danger.

In addition, Fairline has told 365 workers that their working hours will be cut, and their wages will be reduced.

The news was announced to all 1,360 Fairline workers at a meeting at the Broadway Theatre in Peterborough. Derek Carter, CEO of Fairline, said that starting from 10th November, four production lines would work a two-day week, and a fifth production line would work three days a week until Christmas. Also, there would be a forty percent wage cut for all affected workers.

Derek Carter said, “We acknowledge the ill-timing of such action for the affected members of our workforce and are saddened that economic circumstances outside our control have forced this regrettable decision upon us.”

The reason for the cutbacks is Fairline’s hope that they will be able secure the long-term employment of the whole workforce by cutting working hours.

Bosses of Fairline blamed the credit crunch for sucking demand for its luxury boats and products. ‘We’ve just had our new building open recently, and we thought things were looking good, so we’re all incredibly shocked and upset,’ one worker said.

The credit crunch has not only taken its toll on Fairline Boats, but on many other Peterborough companies. For example, furniture makers Willis and Gambier went into administration. Other companies including Pearl insurance, Persimmon and Stamford homes have had to cut jobs in order to cope with the credit crunch.

Housing Market

With news of the mortgage squeeze and the house price slump continuing to circulate around the UK, the downturn has affected Oundle too, with the earlier closure of mortgage brokers Crosby Hansen being an early indicator.

According to Southam’s, property transactions have dropped, but it is perhaps not as bad as the national situation. Because Oundle is a rural town, its property market is not as badly affected as the urban areas.

The current property market is very quiet, though. Sellers are reluctant to list their property and buyers are holding off from buying properties. The rental market, however, has grown three-fold, with the possible consequence that in Oundle it may be close to the point of saturation.

According to rightmove.co.uk, house sales in this area have been on the decline since 2006. There has been a 68.4% decline in house sales this year compared to 2006. With housing prices continuing to fall, the number of housing transactions will stay low until this crisis is over.

With the current economy not looking very stable and consumer confidence at a all-time low, the downturn is predicted to affect us all well into 2009.