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If you turn on the news on the television, or pick up a newspaper at the moment, pretty much the only thing you are likely to hear about is the imminent arrival of the next general election. If like many individuals across the country, you are already sick of hearing about this, I apologise for this article in advance and you might want to read something else instead!

The current run up to the election is causing quite a stir amongst everybody in the UK, both on a personal and a business level. And it’s not just the banking sector and city analysts who are watching the situation keenly for a clue to the future of the UK economy, but all businesses are affected, from corporate institutions, right down to the sole trader.

Following the credit crunch and latest recession, one of the greatest concerns for people is what is likely to happen to the economy, regardless of whoever gets into power and whether or not we are likely to see economic recovery pick up, or even continue. One of the other main related concerns is whether we will start to see banks and building societies relax their lending criteria and start to offer loans once again.

At this stage, I should point out that I have no intention of getting all political about which party would be the best for the country and this is intended as a general overview of what is currently going on, with particular reference to the loan industry and what is likely to happen post election, irrespective of the outcome of the election.

Currently, the UK is still reeling from the recent recession and although we are seeing some signs of recovery, with markets picking up and banks slowly beginning to offer some more competitive personal loan and home owner loan deals, which might actually attract new customers to them for a loan, recovery is still extremely slow and the levels of growth experienced in the economy at the moment are only just in the black.

In the first few months of this year, there was quite a lot of positive growth within the housing and home owner loan markets, as well as personal loans, as consumers started to feel more positive about the long term future. But with the contest for who will run the government from May this year closer than it has been for a long time, between all three main parties, consumer confidence has dropped away significantly in recent weeks.

Rather than rushing to apply for a new loan and get accepted as soon as possible, it would appear that many consumers are taking a far more cautious approach towards their finances at the moment, and are awaiting the outcome of the election before they are prepared to commit to an additional monthly loan repayment.

In fact, rather than taking out new loans, many existing borrowers are making a serious effort to repay their existing loans and credit card debts, as many people are uncertain about the future of the economy in the next couple of years or so and the possibility of large tax rises and possibly increasing unemployment. The main reason for taking out a new personal loan at the moment is as a debt consolidation loan in order to reduce monthly repayments on existing loans and increase the level of disposable income in anticipation of whatever financial storm lies ahead in the coming months.

Many financial experts believe that the worst possible outcome of the general election would be a hung parliament result, as this could have the effect of knocking consumer confidence and that of the financial markets as well, due to a potential lack of coherent political strategy.

Even in the event of a clear victory in the election for any of the main parties, the UK is still likely to be in for a tough time over the coming months and possibly even years, as whoever wins the election will have the unenviable task of repairing the UK’s broken economy and repaying all the government borrowing and loans from the International Monetary Fund. This is almost certainly going to lead to an increase in personal taxation in one form or another and possibly even job cuts, particularly in the public sector and government positions.

It is little wonder then that many individuals in the UK are making such an effort to repay their existing personal loans and credit cards as soon as possible. Another good reason for doing so at the moment is due to the fact that interest rates on loans are particularly low currently and people wish to repay their loans and other debts before interest rates increase once again, although it looks as though the Bank of England will keep rates low for some time to come yet, despite talk of increases in the springtime of this year.

So what will happen in the future of the loan industry? All the major political parties appear to be committed to forcing the major high street banks to start offering loans once again, both to small businesses, as well as personal loans and home owner loans, although whether or not this will be successful remains to be seen, as the current Labour government has been saying that it will get the banks offering business loans again for some time now and although the banks claim that they are lending again, small businesses, as well as individuals, are still finding it difficult to be accepted for the loan they need.

At the moment, the financial and loan markets are in turmoil, largely due to the excitement of the up and coming general election. But whatever the outcome of the election may be, the likelihood is that within a few months everything will return to normal and settle back down to the dull routine.

Hopefully there will not be too much disruption and the economy of the country will continue its long slow path to recovery, however long that takes. Market forces will mean that people who are currently putting off making any financial decisions will eventually take out the loan they may currently be considering and people will continue to want to move house, boosting the housing and home owner loan markets, the status quo will have been restored and many of us more cynical individuals may wonder what all the fuss was about!