The Question: helping or harming?
Recent articles in the press have been describing the effect of those reclaiming PPI as ultimately boosting the UK economy. Research by The National Institute of Economic and Social Research (NIESR) has shown that the effect of people reclaiming mis-sold PPI could increase the UK GDP by 0.1% by the end of 2012. So today we ask the question, is reclaiming your mis-sold PPI good or bad for the economy? There have been reports in the press that these ‘windfalls’ could not come at a better time. They are being used by people to pump money back into the economy and help themselves with the financial issues they are having. The other argument to this is that by reclaiming this money the British public are not allowing the UK banks to get back on their feet. So the question is:
Is Reclaiming PPI helping or harming the economy?
Harming the economy
The banks have posted record losses over the last few years due to the provisions that they have had to make in their Accounts to repay consumers who have been mis-sold products. These losses are preventing the Banks from stabilising their balance sheets and being able to offer finance to businesses that are struggling.
In addition to this instability, the breakdown in trust as a result of the recent spate of mis-selling scandals is resulting in people engaging less with their bank, again creating an issue with Banks getting the much-needed funding into the market place.
Helping the economy
Customers have paid banks billions of pounds for products that they did not want or could not use. Whilst it is unfortunate that the timing of these funds being given back to their rightful owner has come at the time of a double dip recession, the fact remains that the Banks have had the benefit of this money and it needs to be paid back.
Many people are now receiving windfalls that are allowing them to put money back into the economy. The windfalls are keeping the economy above water, as without the billions of pounds that are being paid back into Society the UK Economy would be in a much worse position than it is at the moment.