Conversely, inflation is expected to stay above the target of 2% at least for the next year which is not good news for households that are already struggling financially. According to Sir Mervyn, the economy will remain slow as well as uncertain and he refers to the current crisis in the eurozone as being a ‘storm’ heading in the direction of the UK.

He goes on to say that the UK has survived the biggest downturn since the 1930’s and that the loss of the eurozone, the UK’s leading trading partner, there will be a huge impact on the economy at home. There is no way to ‘quantify’ what the dissolution of the EU would do to the economy of Great Britain, but it will certainly have a dire consequences.

Although there is no way of telling when this dark ‘cloud’ will move past, again his metaphor, but he has every reason to expect that growth in the UK will indeed recover and that inflation will drop once again. Sir Mervyn then says that Great Britain will be ‘buffeted by winds’ and there is no way to know from which direction they will come, but come they certainly will.

In the end, recovery is made harder because of the uncertainty in the EU, but once the story unfolds, it will be easier to get a grasp on what needs to be done.

On Monday, financial markets were in turmoil as investors prepare for Greece’s imminent exit from the single currency and just the day before it was admitted that the ‘elite’ European policymakers were seriously considering the possibility that the single currency may be doomed. Markets were tumultuous as oil, shares and the euro were heavily unloaded by investors who fully expect Greece to depart the EU.

Again, Greece is stalling but EU leaders have only given President Karolos Papoulias until Thursday to join the continuing talks and broker a deal. Furthermore, Chancellor Osborne warns that even the thought of Greece exiting the euro is creating havoc in economies throughout all of Europe. He further believes that the crisis unfolding in the eurozone is significantly impacting growth in the region.

As a result of the uncertainty surrounding Greece’s departure, borrowing rates are skyrocketing for Italy and Spain because of the very real fear that they too will succumb to the contagion that very well may spread throughout all of southern Europe. On Monday, the FTSE 100 Index dropped more than 100 points, losing approximately two percent of its total value. As well, Madrid, Athens, Paris and Frankfurt saw huge falls in prices of shares.

At the end of the day, investors sought out safe havens in Germany (bonds) and the Great British Pound which benefited those two countries to some extent. Unfortunately, there is still a great deal of concern about the future of the EU.

With new leadership in France and Greece’s protests against austerity, there is truly growing concern that both countries will default on loans, forcing their exit from the single currency. In fact, the value of some of Britain’s largest companies decreased by £25 billion as traders rushed to dump what they view as ‘risky assets’ in order to place their investments in safer markets. This has triggered what is being referred to as a ‘fresh crisis.’

Since the beginning of this year, the EU did see a period of relative stability but all this came to a screeching halt after France’s election of a new president who rose to victory on his anti-austerity stance. With Greece mired in a hung parliament, concerns are mounting that both countries will default on bailout loans.

An emergency meeting of the EU leaders has been called for May 23 in which the president of the EU, Herman Van Rompuy, looks to open discussion on fostering growth amidst popular complaints against austerity measures in those countries. Traders are concerned that political unrest will prompt an insurmountable debt crisis, especially in France and Spain, so they are seeking safer havens for their investments.

The market is focused on safe havens at the moment and with Greece sure to challenge EU authorities in June and France’s anti-austerity leadership, investors are pulling their backing which has taken a huge toll on UK businesses. Throughout all this, Spain is expected to ask for further funding whilst all eyes look towards Germany to do more to help struggling countries. Whether or not the EU powerhouse will live up to expectations is yet to be seen.

At the heart of the issue is water scarcity throughout the EU which prompted Lord Carter of Coles to say that governments must allow water costs to rise in order to overcome this problem. As Chairman of the Committee (The Lords Agriculture, Fisheries and Environment subcommittee in the EU), Carter was speaking to Europe as a whole, including the UK.

The Lords Committee issued a report entitled An Indispensible Resource which stated emphatically that urgent and immediate action is needed if the quality and availability of water in European countries and the UK are to be protected. However, contrary to what one would believe, this is not to provide funds to increase the availability of water. Rather, it should be adopted to ‘force’ households into conserving precious resources.

Similar measures had been adopted in the United States, Florida for example, when drought conditions called for water rationing. Not only were households not allowed to water lawns or wash vehicles, but they were also heavily fined if found in violation of these restrictions. This did help curb mindless use of water whilst water tables were restored over time.

Even so, many critics believe other measures should be adopted since families and businesses are already strapped by financial pressures in an area where the debt crisis is extreme. Raising water bills by £20 per year may not seem much, but many households are already operating under negative disposable income budgets.

However, the worst news is that British banks are on the verge of being investigated for having been privy to the systematic misselling of interest rate derivatives to SMEs. According to the FSA, what they have uncovered thus far is indicative of unethical sales practices along with questions regarding the suitability of products having been sold. Sadly, the banks in question are not little local community centres but large financial institutions such as Lloyds Banking Group, Barclays, Royal Bank of Scotland and HSBC.

After an investigation conducted by The Daily Telegraph and The Sunday Telegraph, The FSA picked up the hunt and are actually on the brink of a full-fledged investigation with the potential for enforced action. Reports are continuing to pour in from customers as well as paperwork from the banks in question and this phase of the preliminary work is forecast to be complete by next month.

It appears as though Britons are being mis sold products and services across the board and the problem has become so widespread that the FSA is having a time of it trying to sort through mounting stacks of complaints. Companies are misselling products and other companies are misselling services to reclaim money and it has become one vicious cycle.

There is however a bit of good advice which can go a very long way. Don’t sign anything whatsoever until you have had time to thoroughly read and understand the small print.

Supermarkets in the UK have announced a 2p drop in prices per litre of unleaded as well as for diesel in approximately 1,250 locations. Amongst the major chains that have cut costs are Morrisons, Asda, Tesco and Sainsbury’s. The motorists group, AA has voiced their delight in these cuts because for months on end prices have been rising well beyond the rate of inflation in other consumables.

As recently as two weeks ago, petrol prices in the UK reached record highs of 147.9p a litre for diesel and only 2p less expensive for unleaded. Now with the recent price wars, consumers are lining up at pumps hoping that this is a trend and not just a bank weekend sale. Even so, this amount of savings will reduce the cost of a tank of petrol for the average family vehicle by about £1.50.

The head of public affairs for the AA stated that this downward movement in prices has come not a moment too soon and that it is the organisation’s hope that the lower prices won’t be stopping at the 2p mark. A spokesperson for Morrisons also noted that these lower prices should help consumers who are ‘cash strapped’ and the trading director for Asda confirmed that petrol prices have been difficult on motorists this year.

Even a 2p reduction in price is welcome news to consumers as this has been an extremely difficult year not only in the cost of petrol but also in energy prices across the board. If all energy including gas and electricity were to drop a bit, households might catch the break they have been waiting for since the push towards austerity has caused an economic crisis for those working families already finding it difficult to survive.

Even so, late last month protesters met outside Centrica’s headquarters to protest what they are calling a major ‘rip-off’ in energy bills which are supposedly higher because of the rising cost of gas. According to Greenpeace, there were at least 50 people blockading the road leading to Centrica’s main offices in Windsor, Berkshire. Protesters were flaunting a spoof energy bill that is said to have been 260 feet square.

Not only were protesters marching outside Centrica HQ but they also barricaded several entrances with wooden planks with real bills attached to them and at one point they were actually within the building looking to find Sam Laidlaw’s offices, the chief exec of Centrica. Their intention was to ‘redecorate’ his office by wallpapering it with energy bills.

The bottom line for these irate consumers is the fact that the average energy bill rose by as much as £150 in the previous year of which at least £100 was said to be the result of higher gas prices. Subsidies for ‘going green’ are not rising as they had been promised and the UK is more dependent than ever before on imported gas. The group wants Centrica to ‘get off gas’ and onto sustainable, renewable energy which they feel is the best way to lower bills.

These figures came out on the very same day that lenders raised mortgage rates for more than one million homeowners. Lenders blamed the economy for this rise as they claim there is an increased cost involved in funding mortgages. Most of the borrowers affected are customers of Halifax and the average rise will total approximately £200 per year. Other banks who have notified customers of a rate increase include Co-operative Bank, Yorkshire Bank and Clydesdale Bank, although their increase in rates are not said to be as high as those imposed by Halifax.

The north east did experience some rise in prices with a 5.6% increase in March but that is a bit misleading as overall, the yearly drop for that area of Britain fell by an average of 2.8%. Even London that has been fairly steady throughout the housing crisis saw a fall in average house prices during March with a drop of 1.8%. On the other hand, London also saw the largest increase on an annual basis with overall rise in house prices of 0.7% for the year.

Wales saw the largest drop with 4.1% for the month and for the year the decline in prices was 5.5%. However, the latest data shows that purchases are up a bit but this is not really seen as a stronger market. Rather, the end of the stamp duty forgiveness that ended in March caused a rush to complete transactions before first time buyers had to pay the tax. The end result is that the housing market is still weak and the forecast is not good.

Instead of avoiding spending at the shops, it is important to rethink where money is being spent. It is their consensus that the only way to improve the economy in the UK is to buy products made in Britain. This benefits everyone all the way down from the end consumer to manufacturers, suppliers, distributors and retailers.

Chief economist Simon Wells at HSBC believes that it is all too easy to get disheartened with news such as the current rate of inflation, the lack of jobs and benefits being stripped bare. Wells said there is no reason to panic but as consumers gripped by conditions which are worsening by the day but it is difficult not to fear the future.

In the face of all this adversity there is a way out, according to the HIS Global Insight’s chief UK/European economist Howard Archer. He contends that the solution is simple and that consumers should make every effort to keep their money in the UK. This means buying everything from clothing to major appliances and vehicles from UK producers.

Archer believes that consumers can help lead the way out of recession by spending money here in Britain. Rather than stowing money away for the future, it is better to continue as usual with one main change – buy British. This doesn’t mean buying high end fashions and top of the line electronics. What it means is taking the time to seek out local farmers for produce and purchasing clothing made right here at home. Yes, it will take a bit more time to shop but in the end the money will stay right here to improve our stagnant economy. Austerity isn’t working so it is up to the consumer to put their money where it counts and that is in our own economy.

For greater than 1 million homeowners mortgage payments may increase by as much as £200 annually because of these higher rates and the travesty in this is that many of these homes are already in negative equity. This is a huge problem for homeowners who might otherwise be able to refinance their homes because it would be virtually impossible to get a loan larger than the value of the home.

Halifax alone has approximately 850,000 customers who may be paying this £200 extra each year due to these higher rates. Other lenders who have announced an increase in mortgage rates include Clydesdale, Co-operative Bank, RBS and Yorkshire banks. These lenders have announced that rates will rise by as much as 0.5 percentage points for their current customers and is indicative of the fact that the days of low interest rates are over.

Although the Bank of England has kept rates at historic record lows, 0.5%, lenders are raising rates because they feel it is warranted by a floundering economy. During this time when households need as much help as possible, they seem to be getting hit from all sides from taxes to mortgage rates. Finding themselves in negative equity compounds the problem which may make things significantly worse for personal finance as well as the UK economy that is already in trouble.