The heavy price being paid for a global financial crisis

AS the credit crunch begins to bite we go to Gordon Brown's neighbours in North Queensferry...

THE PUBLICAN

DEREK MACLEAN, owner of the Albert hotel, pub and restaurant

I've been running this pub for four years, and I took on the lease in May, at the worst time possible. But there's no point regretting it, because you make decisions in life without knowing what's around the corner.

People are careful about spending money in the pub and restaurant, particularly mid-week when they might come out for a drink, a game of pool, or to watch football. The weekends are slightly less affected, but fewer people are going out for a meal.

But I don't think the true effect of the credit crunch has come out yet. At the moment, people are worrying about how bad it could be and being careful in the run-up to Christmas.

This is not a game for the faint-hearted; gone are the days when you opened a public house and made lots of money. Fortune will favour the brave. I'm doing a refurbishment of the bar and restaurant because if you stand still you go backwards. The trade will pull itself back and it's just a question of how long it will take to get back to normal profit.

The chat in the pub has become predominantly about the crisis since the American government's decision to bail out the banks.

There have also been horror stories about older people who have invested their retirement on stocks and been wiped out overnight. That's a huge concern because there's a knock-on effect to the whole community.

The local press this week said 173 jobs were going in Dalgety Bay, which, for a small area, is huge. Everybody in the restaurant and publican trade is holding their breath at the moment and hoping we can get through. We are cutting into profit margins to keep prices level for the customer.

WORKING COUPLE

MICHELLE and SIMON TATE, HBOS debt collector and ScottishPower electrician

Working for HBOS has been an upheaval, not knowing what's happening. We are putting holidays on hold because we don't want to book something and then can't afford it when it comes. This time last year we had done 60% of our Christmas shopping, whereas this year we've got three or four things. We are having to be careful about what we spend because we don't know what will happen. The kids want more electrical things, but they are expensive and you have to explain if you get that you won't get other things.

The kids are well aware of the financial crisis because of the media and the schools are keeping them aware. Our 12-year-old son bought some 25p two-litre bottles of cola from the shop the other day because he had seen them on offer and he thought: 'I've got to buy them because of the credit crunch.'

When you talk about the sub-prime market, we're not in that area because we pay our way. We get letter after letter every week offering credit cards, and there must be a hell of a lot of people taking it up. But when you've got a family you have to think if the worst happens we can afford it.

When ScottishPower were taken over we took shares in the company. The bottom has fallen out of them, but I always keep thinking they are going to get better. My shares have dropped about 30%, but it's a long-term investment so I might see whether they go up.

But even the analysts have said it's just sheer panic as far as the stock market is concerned and even the solid companies are losing. It's a horrible situation at the moment, you feel powerless so you've just got to ride the storm. I'm not a Labour man, but if there's anybody I would have in charge now it would be Gordon Brown. I don't personally know him, but my mother knew his father and he has always been hard-working and less of a celebrity than other politicians.

Kevin Myles: 'It's hard to blame anyone because it's the whole world that's suffering'

SELF-EMPLOYED

KEVIN MYLES, 44, health and safety adviser

Our mortgage is on a variable rate, so we haven't known what to expect from one month to the next. You just try to put aside an extra bit every week. It's my son's 21st birthday and our silver wedding anniversary next year, so we were planning a big celebration. We don't know whether that can go ahead as it makes it more difficult to save.

I even try not to watch the news, because you've not got to let it bother you. We've thought about moving our mortgage and our savings, but where would you move it to? Everyone is having the same problems and it's hard to blame anyone because it's the whole world that's suffering.

Our mortgage deal is up for renewal in January after three years, so I've already been in touch with the building society and they have already offered me a better rate. But with the Bank of England cutting the interest rate since then, I'm in a quandary whether to commit to two years or five years on these attractive deals, or whether the half-a-per-cent interest rate cut will make a difference.

The girl in the building society couldn't even advise me because no one knows what is going to happen.

My son is still living at home because it's so expensive to rent or buy at the moment. He's an electrician at Grangemouth and his company went bust two weeks ago, but fortunately it just changed hands so he's still working there.

Last Thursday, he was due to get paid but, due to the company going under, he didn't get any money. He'd been working overtime and it was coming up to his holidays, so it really affected him, but he was lucky that he finished on the Friday and started another job on the Monday, although he still lost money.

The hardest bit for my son is that going out and getting a mortgage is impossible now, even though he's got a good job. It's Catch 22 now – because no one can sell their houses you'll probably get a decent deal, but you can't get a mortgage to buy it.

BUSINESSWOMAN

JILL BROWN, 55, runs an electric engineering business with her husband

As a small business owner the credit crunch is worrying, especially if our clients start to cut their costs and the work begins to dry up. But we are all in the same position and it might well knock everybody. Whatever will be will be, and there is not much point about worrying about it. Nobody knows what will happen, and we just have to try and be ready for it.

I am more concerned for my two sons' future, and whether their jobs are safe. One is at university and the other works for a video games company.

It's going to be much harder for the boys than us to get through the credit crunch. The older son does not know whether he can hold on to the job he has got, and the younger one is worried about going out into the job market in this kind of climate.

It's hard enough for people who have got jobs, but for the young people just starting out it's going to be a real struggle.

A few years ago we invested in their futures by buying them each a house to help them on the first rung of the housing ladder. That was our savings that went on their houses, which is probably a safer place for them at the moment.

Now the boys are worried about the housing market dropping, but once you are on the ladder it doesn't matter, because all the houses are going up and down the same; it's proportionate.

The housing market did go up a ridiculous amount at one point, and because of the time that we bought, we probably haven't lost any money in real terms. Our properties have just gone back to what they were originally worth.

We didn't buy the houses to make money; they are homes in the same way as our house is a home. We don't think about its financial value. We have lived here for a long time and we love it.

PENSIONER

TREVOR WATKINS, 70, retired university lecturer

I feel lucky that I am not yet being affected by the credit crunch. We own our house, so we don't have a mortgage to worry about, and it doesn't seem to have got to the main part of the economy yet. You do see the bills for gas and electricity going up as you try to economise, but we have been lucky so far… we can cope with the costs.

My pension is a worry, but the kind of scheme I'm in isn't one that's saying it's in deep trouble over the last few years. How long that will remain I don't know; all schemes in the end are tied into the economy. In terms of my family, I have three children – one is a consultant, one works for a UN agency in Geneva, and the other works for Cern, so none of their jobs are a worry. None of them have to renegotiate their mortgage at the moment, so they are quite safe.

I have eight grandchildren and I do worry for them. They are growing up into a different world from their parents, let alone grandparents. What they are going to have to face in terms of world problems and global finances, I don't think we have yet seen the extent of it.

I think this is worse than anything in the past because it involves the whole financial structure and it is a global crisis. Because America is going into recession, most of the rest of the world is following. We have seen how powerless a single government is, but I think the British Government is doing the right thing by working out packages for the banks. They have come up with a scheme that experts say is much smarter than that of the Americans.

But I'm a fatalist, I'm concerned for the present and we can't know what will happen in the future.