As 2008 drew to a close few of us will have mourned its passing, but what should we expect from 2009? More of the same, or light at the end of the tunnel?
2008 started quite innocuously, with little sign of the true scale of the turbulence to come. But twelve months later, the devastation continues, as retailers fall like dominoes, unemployment continues to rise sharply and everything from the pound to house prices carries on plummeting.
Picking over the bones of 2008 in any detail is really far too depressing to contemplate – the world watched in horror as the US sub-prime crisis spread its poisonous influence like a tsunami, infecting just about every national economy along the way.
Banks and lenders like Fanny Mae, Freddie Mac, Lehmans and HBOS were tipped over the edge and, in Iceland, even an entire country went to the wall.
There followed an almost unprecedented period of hand wringing and government action, with trillions pumped into banking systems worldwide in an attempt to shift the credit blockage that had cemented the now blithely accepted ‘credit crunch’.
Bankers blushed but largely failed to fall on their swords, governments gambled, running up huge debts which will come home to roost eventually and here, interest rates were slashed with impunity as the economy tumbled inevitably towards recession.
It was hardly a year many of us will look back on with any fondness. But will 2009 be any better? In two words: ‘probably not’. So what is in store?
Well hardly surprisingly it seems that most of us are stalked by fear of what lies ahead – it not very often that we start a year with so little idea of what is in store.
Dire predictions abound, with half of homeowners already fearing repossession and unemployment predicted to rise to over three million. Meanwhile, following the collapse of Woolies (where will we all get our cheap and cheerful children’s party gifts for under a fiver now?), Zavvi and Adams, we all wonder which will be next.
The housing market, arguably the engine driving this whole mess, remains in tatters. House prices fell 16% last year, and are expected to carry on in the same vein this year. Small wonder than that "consumer confidence" is at a low ebb. There’s no getting away from it, it's going to be a tough year for just about everyone.
All that said, there are one or two faint silver linings. Low interest rates mean cheaper mortgages for some (first time buyers look away now). I find myself in the unusual position of letting my fixed rate deal run out – simply because my lender’s standard variable rate is cheaper than any of the fixed or tracker rates on offer. And, if the Bank of England continues to swing the axe, it might get even cheaper. Energy might start to get cheaper too, despite the cold snap and if the Russians and Ukraine can sort out their differences.
On a cuddly note, the crisis might just bring us all a bit closer together according to that veritable credit crunch oracle, Vince Cable MP, who said: "One potential upside of [the economic downturn] is that in times of difficulty British people have traditionally rallied round. Maybe I am being a bit sentimental, but I hope that is something that will come out of this."
Meanwhile, 'trend spotters' are already spouting their usual mix of buzz words and baloney – all dressed up as credit crunch chic. Prepare to be nonplussed (Homemade shoes? Please).
In the end though the very real problem we all face is the inability to prepare. If we don’t know what is coming, how do we prepare for it? In short, 2009 will probably be another year of taking it on the chin. So, chin up.
