In the week when Charlie Bean, the Bank of England's deputy governor, said this was "the largest financial crisis of its kind in human history", the UK economy appeared to be marching into recession for the first time in 16 years as the economy shrank by 0.5 per cent in the last quarter.
The FTSE 100 index lost 9 per cent of its value at one point, wiping £90bn off the value of leading shares. Its impact on sterling was also immediate. As recently as July, the pound would buy $2. This week it suffered its biggest fall against the dollar since 1992 – and tourists found the pound in their pockets had fallen to below $1.53.
There were calls last night for the Bank of England to cut interest rates to help the less well off. The TUC's general secretary, Brendan Barber, said: "The newly unemployed should be given more help by reversing cuts in Jobcentre Plus staff, increasing statutory redundancy pay and lifting the amount of redundancy pay that can be taken tax-free."
The week's events will also bring more bad news for consumers as they face higher prices in shops, dearer fuel and more expensive holidays.
The IoS spoke to five members of the public to find out how the financial crisis is biting.
Name: Andy Chambers
Lives: Brentwood, Essex
Marital status: divorced
Children: one daughter and two sons
Cars: none – uses company van
Income: £50,000-£60,000 a year
"It's hard to avoid the credit crunch – what with it being drummed into us all the time by the newspapers and the TV, but the way I work means that if money is short I just work harder. I'm still getting near the same amount of money as before, but I'm having to work harder for it. I'm signing up for more 24-hour call-outs and working more weekends. There is normally work, especially at this time of year, but more of the jobs are smaller scale, rather than large construction projects. I'm not worried about losing my job though. People always need things fixing. We would normally have booked a big holiday by year end but things are so unpredictable that we can't. We have slightly less money and it's harder to know when to book time off. A holiday used to be a priority, now it's just to keep working. Everything is going up: gas, electricity, food. I'm certainly noticing these costs a lot more than before."
The estate agent
Name: Joanna Cobb
Marital status: married
Income: owns business
"My disposable income hasn't changed as I just pay myself a straight salary as opposed to commissions. I definitely think about my spending a lot more now. We are trying to avoid any wastage. Sometimes we'll drive to work together to save money. Our house is oil-heated as we live in the countryside and don't have gas mains. We believe Christmas is too commercial so we only spend £10 on each other. We take two holidays a year – and we'll continue to do this. Obviously, being an estate agent is currently difficult."
The City banker
Name: Sanjay Sheth
Lives: Stanmore, London
Marital status: recently married
Income: declined to say
"I have about 45 per cent disposable income left after most bills. I spend most on going out, household expenditure and holidays. Having dual incomes makes it easier to pay bills but I have noticed the spiralling electricity and gas bills. Eating out less has been one way of cutting back. The global financial landscape has changed so much I will never take my own job for granted. I will not be cutting my expenditure at Christmas and I hope this will be reciprocated! As for holidays, they are a vice and I certainly won't be cutting back."
Name: Andy Brown
Lives: Ballymena, Northern Ireland
Marital status: married
Income: £50,000-£60,000 (joint) a year
"I'm fortunate that I'm on a monthly salary, which not everyone in teaching is. The credit crunch has a direct impact on our jobs because pupils' parents might have lost a job and that affects behaviour in the classroom. My disposable income is down 15 per cent. We started to have a house extension built before the credit crisis, so things are very tight. Our shopping bills have gone up by 25 per cent and we've had to cut back on luxury items. I'm very worried about our utility bills. We have to be more mature and sensible about money now. We will work out our Christmas budget very carefully. Our children understand that money is tight."
Name: Jacqueline Rice
Marital status: married
Children: four sons
House: sheltered accommodation
Income: £9,000 a year
"We live in housing association sheltered accommodation. Our small business went bust a few years ago and we lost everything. Before the credit crunch we were struggling and now it's even worse. I have really felt the impact. I can't have the heating on; we don't want to use as much hot water. It feels a lot more real as we've just got a huge electricity bill. Now we are dreading the bills coming through. My husband gets his small private pension and that goes on one bill. I've started to notice the small things. I went shopping this morning and the price of cooking oil has gone up a lot in a month, and cheese has gone up hugely. After food and bills I have very little left. We get help from charities, and without it we couldn't keep going. I can't even think about Christmas this year. I bought my cards in the sales after Christmas last year, and our family have said to each other that we don't need to worry about presents and that just a card will do. It's going to be very quiet."Reuse content