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Skip to 0 minutes and 5 seconds MARTIN UPTON: When managing your money, it’s important to understand the features of the current economic backdrop that have a direct effect on your finances. So let’s set the scene. After the recession that followed the 2007, 2008 financial crisis, our economy is growing again, though it’s still quite fragile. And the vote to leave the European Union may push the UK back into another recession. Interest rates are at an all-time low. By contrast, house prices in the UK are still rising and are at an all-time high. And it’s making it difficult for youngsters to get on to the housing ladder. London property is especially booming.

Skip to 0 minutes and 48 seconds Shares have spent the last two years going up and down in price with no sustained trend line. Flooding is threatening to push up insurance premiums. Gender price discrimination on insurance is now not permitted in Europe. Unemployment is falling quickly, but will that Brexit vote impact on the jobless numbers? Meanwhile, university fees are at an all-time high, with some universities preparing to charge tuition fees of over 9,000 pounds a year. Students are now graduating with debts of tens of thousands of pounds. There is a pensions revolution in the UK, with greater powers to those approaching retirement to access their pension pots. And there is a new state pension too. Major changes are taking place to taxation of savings.

Skip to 1 minute and 39 seconds Most people will now be able to save without any deductions of tax on their interest earnings.

Skip to 1 minute and 46 seconds The UK economy as a major crossroads now following that vote to leave the European Union. Will the economy suffer or prosper in what will be a new trading environment? Will the huge fall in unemployment continue? When will interest rates rise again? Currently, this seems unlikely to happen for quite some time. Will the government ease up in its attempt to balance its budget, given the uncertainties associated with Brexit? There are plenty of things to keep your eyes on when managing your money and planning your financial future.

How the economy affects us

Everyone – directly or indirectly – is affected by the good and bad events in the economy. One way or another, those of us in wealthy societies are all shoppers in the financial supermarkets. The video highlights some of the many issues that have had an impact on households and personal finances in recent years.

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This video is from the free online course:

Finance Fundamentals: Financial Planning and Budgeting

The Open University