Five major events since the introduction of the last new fiver
With the new polymer five pound note now in circulation, we look at five key changes in the market since the last £5 note was introduced in 1993.
1) The cost of living
According to figures from the MEI (Mathematics in Education and Industry), it was possible to purchase 5 litres of petrol, 4 loaves of bread, a pint of milk and a first class stamp for £5.00 in 1993. Today, you would only be able to purchase the equivalent amount of petrol for the same value.*
2) House price growth
In 1993, an average UK home would cost you just £68,032 in comparison to today’s figure of £213,927 (or £572,402 in London), according to figures from Rightmove.
3) Interest rates
By the end of 1993, interest rates had been reduced from 10% in January on three occasions, ending the year at 5% in an attempt to speed up the process of economic recovery.
By comparison, today’s interest rates have recently fallen from an already low 0.50% to just 0.25% in response to the turbulent and unpredictable market conditions we are currently facing.
4) The Euro and the EU Referendum
The Euro first entered into circulation on 1st January 2002 and has shown clear benefits including a rise in physical investment of 5% within the Eurozone as well as a reduced risk of exposure to changes in currency exchange rates. However, the currency has also been responsible for tumbling interest rates and excess liquidity provided by the ECB which made it easier for banks in member states to borrow significant amounts of capital and over inflate their public and private debt levels, thus resulting in the ongoing European sovereign-debt crisis we are confronted with today.
The more recent outcome of the EU Referendum has sent similar shocks through the financial markets and caused Sterling to drop to a 31-year low within a 24-hour period. However, in the weeks following the announcement, whilst we haven’t quite seen the apocalyptic outcome feared by many commentators, the economic outlook is unlikely to settle again until the latter part of 2017 when we are afforded a greater level of clarity over our future position as a nation outside of the European Union.
5) The Mortgage Market Review (MMR)
Following the latest financial crisis of 2007-08, the regulator unleashed a wave of new legislation created with the primary aim of improving consumer protection. Many mortgage products which were available prior to the introduction of MMR have been subsequently withdrawn since the financial crash and borrowers are now faced with an entire host of new challenges surrounding affordability criteria.
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*MEI Figures 2013
Cost of living- 1993:
50p – 1 litre of unleaded petrol, 39p- loaf of bread, 25p – first class stamp, 34p- pint of milk