Julian Knight: Now's the time to protect your cash from euro threat

 

The Anglo-Saxons crashed the world economy; now it looks like the Franco-Saxons are going to see that it burns.

Forget about the little local sideshow of Cameron being ambushed at the euro summit or Clegg's infantile no-show at the parliamentary debate which followed, the question for me is will the deal being put together by the 26 actually work?

At the heart of the euro-club is a basic conceit. The French and the Germans believe that that if they construct a deal, then the markets simply have to agree too go along with it. The determination of the EU – without those pesky Brits – will stare down the market, leaving it with no choice but to kowtow. Such arrogance has no appreciation of history – just think back to the UK's ERM debacle. Then, the staring contest with George Soros et al lasted barely a few hours before the Major government had to give way.

What the eurozone should be asking itself is what does the market want and can we cauterise the crisis with bigger more flexible action than may right now seem necessary. But instead the eurozone will spend three months debating a programme that already looks inadequate and will only be diluted further by the politicians. The French may be miffed at their high bond yields but they are fools to shoot the messenger. Eventually, sometime down the line, more radical action such as the issue of German-backed eurobonds combined with the departure of the Club Med countries will probably have to happen.

But what, in this my last column of 2011, do I suggest you do to protect yourself against as momentous an event as the break-up of the euro? On page 84 we look at the potential fallout for people with property in the Mediterranean – a plunge into negative equity could await. But that is relatively few people. The rest of us could see the credit markets gum-up as in 2008.

Therefore, if you have short-term credits – such as an overdraft – don't presume it will be there forever. If the crisis comes to a head next year, it would be no surprise to see banks reducing or even calling in large numbers of overdrafts with little more than 28 days' notice. I also think it's no coincidence that the Financial Services Compensation Scheme has just set about a major publicity campaign over people's rights to compensation should a bank collapse. If you do have more in an account than the FSCS's £85,000 compensation limit, it may be prudent to move the excess into another bank or building society.

As for your mortgage, now really looks like a good time to remortgage to a better deal and perhaps consider a fixed deal. The number of products available – even at relatively high loan to value – is at a post-2008 high and rates are far more competitive than they ought to be considering the eurozone problems and the potential knock-on effect of a second credit crunch. Overall, the crisis makes this a critical time to review personal finances.

Seven years too late

Tomorrow, the Financial Services Authority will publish its review of the UK mortgage market. It will probably back off from more prescriptive plans to regulate lending, instead urging lenders to move to a more "affordability approach" when making decisions. In essence, this means looking at people's finances in the round before lending rather than basing everything on multiples of income. Since the credit crunch, many lenders have been taking such an approach anyway, but it will be good to get definitive guidance from the regulator. I just wish it had acted seven years ago when it took over mortgage regulation. That way perhaps we could have avoided the lunacy of 125 per cent mortgages and self-certification.

PROMOTED VIDEO
News
Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Sport
Lewis Hamilton walks back to the pit lane with his Mercedes burning in the background
Formula 1
Arts and Entertainment
The new characters were announced yesterday at San Diego Comic Con
comic-con 2014
Sport
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
football
Arts and Entertainment
No Devotion's Geoff Rickly and Stuart Richardson
musicReview: No Devotion, O2 Academy Islington, London
News
i100
Sport
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
film
News
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
News
i100
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
News
people
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior Risk Manager - Banking - London - £650

    £600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

    The benefits of being in Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Test Analyst - UAT - Credit Risk

    £280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on
    Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

    Edinburgh Fringe 2014

    The comedy highlights, from Bridget Christie to Jack Dee
    Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

    The BBC’s wolf in sheep’s clothing

    What will Evan Davis be like on Newsnight?
    Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

    Finding the names for America’s shame

    The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
    Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

    Inside a church for Born Again Christians

    As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
    Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

    Olivier Rousteing is revitalising the house of Balmain

    Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
    Cancer, cardiac arrest, HIV and homelessness - and he's only 39

    Incredible survival story of David Tovey

    Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
    Backhanders, bribery and abuses of power have soared in China as economy surges

    Bribery and abuses of power soar in China

    The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
    Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

    Highland terriers steal the show at opening ceremony

    Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
    German art world rocked as artists use renowned fat sculpture to distil schnapps

    Brewing the fat from artwork angers widow of sculptor

    Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
    BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

    BBC takes viewers back down memory lane

    The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
    Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

    Nicolas Cage shines in low-budget drama Joe

    Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
    How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

    Make your own ice lollies and frozen yoghurt

    Think outside the cool box for this summer's tempting frozen treats
    Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

    Fiesta is UK's most popular car of all-time

    Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride