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Independent: The Debt Overhang Is A Real Problem For The British Economy. Is There Any Way Out?

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'Jeremy Warner's Outlook: The debt overhang is a real problem for the British economy. Is there any way out?':


The Australians started it, Britain followed suit, and now the Americans are going the same way. Throughout the English-speaking world, central bankers have been attempting to quell excessive, debt fuelled consumption and soaraway house prices with tighter monetary policy. Policymakers won't admit they've been deliberately targeting the housing market -- for their brief is only to regulate inflation and growth -- but in all three jurisdictions this has been the sub-text.


The time has come, says Christopher Smallwood in Lombard Street Research's latest Monthly Economic Review, for a new economic policy. Consumers and the public sector are both over-borrowed, so in the absence of a pick up in business investment and exports, which the Government cannot rely on to occur of their own accord, growth is likely to remain subdued for possibly years to come.

The solution, he argues, lies in fiscal consolidation. If taxes were raised and spending cut, it would produce an immediate reduction in demand, allowing the Bank of England to cut interest rates without triggering a second leg to the consumer boom. This would eventually stimulate investment.

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This would eventually stimulate investment


Why as a company would you set up a company here if the setup costs were half, quarter or lower elsewhere in the world?

Why, if having saved for a deposit and finding that soaring house prices left you further behind would you then risk that money at all by starting a business paying extortionate levels of rent/rates and all sorts of other legal fees and an increasing amount fo red tape?

If you do set up a business what skilled staff are you going to be able to attract at anything like a reasonable rate - most of them are already stuffed with debt, priced out of moving, economic mobility is poorer than it has been for a long time. Why take the risk?

Low interest rates have FAILED MISERABLY in encouraging real investment and investment that would increase productivity as can be seen from the stats.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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