UK 'not out of woods' despite upturn

Despite talk of an economic upturn, HSBC Insurance today warns that the recession is not over yet and there remains an urgent need for continuing caution and financial planning in the face of apparent ‘green shoots’ of economic recovery.

“Both the Nationwide and Halifax measures of house prices have been creeping up over the summer and while an end of recession in the UK is to be welcomed, it is only the first step in the recovery process,” said HSBC economist, Dennis Turner.

He continued: “For all the growing optimism there is nervousness that there is still bad news to come. Access to credit, possible public spending cuts and inflation all have the capacity to turn the initial recovery into a false dawn. We are certainly not out of the woods yet.”

HSBC has identified the following five crucial steps for people to take to limit the adverse impact of the economic downturn on their finances in the future:

* Review your finances and seek professional advice

* Reduce levels of debt

* Do not simply cut your existing insurances as a ‘knee-jerk’ reaction

* Continue to save into a pension

* Insure against loss of income/health/job

However, it seems that most people are not carrying out these vital actions. This year’s HSBC Future of Retirement: It’s Time to Prepare report, found that despite the increasing UK unemployment level, which recently reached the highest level in 14 years (2.47 million), only 6% of people intend to insure against losing their job, income or health and one in ten people have cut existing insurance policies.

Furthermore, 60% are yet to review all their finances despite the change in economic climate, and just 21% are trying to reduce levels of consumer debt. One in nine people have stopped saving into a pension, while only 13% are going to seek professional financial advice.