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24 September 2014

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credit crunch

You are in: Cambridgeshire > credit crunch > Credit crunch: The east's economy

Street with houses up for sale

Credit crunch: Hitting housing market.

Credit crunch: The east's economy

As people are starting to feel the pinch in their pockets with mortgage rises, increasing fuel costs and food prices, BBC Look East business correspondent Richard Bond explores how the credit crunch is affecting the east.

The credit crunch is giving the east's economy a nasty shock, after a decade of uninterrupted growth.

The sectors worst hit are those which have boomed the most in recent years. Property, retailing, aviation, financial services are at the heart of the storm.

Dozens of estate agent branches have closed. It's hardly surprising though when mortgage lenders have withdrawn easy credit.

In April, the Norwich And Peterborough Building Society pulled two-thirds of its mortgage range.

Housing market

House builders have shed staff and postponed new developments. Doubt is being cast on the government's ability to deliver its promise of three million new homes for the east.

Developers are having to come up with innovative ideas to shift their stock. A company in Milton Keynes is offering to pay the first £500 of people's mortgages every month for two years if they buy one of its properties.

In consumer finance, money is much less plentiful. Northampton-based Barclaycard has cut the credit limits on a million of its customers.

Retailers have been feeling the pinch. Upmarket shops selling discretionary items have reported lower sales, as have out-of-town shopping centres because motorists wishing to save on petrol are less willing to drive to them.

Travel and holidays

Stansted Airport has seen its passenger numbers fall for the first time in more than a decade, while Ryanair plans to ground several of its aircraft at the Essex airport this winter because of high fuel prices.

Ryanair plane at Stansted.

Ryanair is cutting its winter flights

Because fewer bankers and business leaders are flying over the pond, two of the region's transatlantic airlines have gone bust this year.

Eos, which flew from Stansted, stopped flights in April, while Luton-based Silverjet collapsed in May. Neither was able to find anyone willing to refinance its operation.

Fortunes in the region's tourism industry have been mixed. Camping sites and holiday parks have reported higher bookings.

It seems the rising cost of air travel and the fall in the value of the pound against the euro have encouraged families to stay in the UK.

However, pubs and day attractions have found it tougher because consumers appear less willing to jump in their cars for the sake of a day out - again, because of fuel costs.

Manufacturers optimistic

The sectors of the economy that have been used to boom times are having a lean period. But the reverse is also true, with many manufacturers doing very well, after years in the shadows.

Firms such as the offshore fabricator SLP, in Lowestoft, are not dependent on fragile consumer confidence as the expansion of renewables and orders for new gas and oil installations all over the world are keeping them busy.

The region is not in recession - yet. It may escape, but it will be a close call.

last updated: 22/07/2008 at 15:22
created: 22/07/2008

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