The victims opf the recession

The real victims of the recession/depression are not those made unemployed, or those losing their homes, catastrophic though these are. They have a hope of restoring their incomes when the economy eventually recovers.

The real victims are those who have recently retired as employees in the private sector or will soon retire.

Their pensions are no longer the final-salary-based indexed pensions, and their pensions have been reduced by the annual raid on them by G. Brown. Ironically much of what they are suffering is to guarantee gold plated final pensions in a swollen public sector.

Their savings have crumbled, both by the reduction in capital value, if they have investments involving shares, and by the reduction in interest rates. Some had hoped to maintain their capital, in order to have an income stream to supplement a poor old age pension, and also as a cushion if they survive long enough to need retirement or nursing home care later. Many of them are already having to dip into their capital, because their income from savings has dropped from almost £50 per thousand invested to as low as £20 per thousand invested.

Pensioners have faced a much higher effective inflation rate than the general public for several years, because of the contents of their "shopping baskets". The things they spend their money on - energy, food and housing in particular, have risen more rapidly in price. Their old age pension has been increased at a miserly rate for several years, based on the national inflation rate, so in real terms many have had a reduction in incomes. As an example, the Alliance Trust Research Centre has calculated than in January the inflation rate facing the over 75s was 5.4%, while the national inflation rate is approaching zero. Of course, there are always benefits to be claimed, but these benefits are not going to convey the level of comfort they anticipated as they saved hard all their lives.

The pensioners have little prospect of seeing a recovery in their fortunes. A new government will have to pay off huge debts, (- the government started the brouhaha over Fred the Shred's pension to conceal the fact that RSB debt requires another handout of £25 billion.) It is difficult to see how it will find much to restore the fortunes of the retired.

It is hard on those who have lost their jobs and/or their homes, but unless they are near to retirement, there is at least hope that a stable economic recovery, like that under Kenneth Clarke in the 1990s, will restore their incomes and prospects. They may have to be very patient, as our economy is in a real mess.