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U K Debt Crisis Beginning To Bite

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Households are now spending more than 20 per cent of their incomes servicing secured and unsecured debt. That is as big a burden as during the crisis years of the early 1990s, even though interest rates today are much lower.
In other words, UK consumers are highly geared, and therefore vulnerable to rate increases. If rates rise sharply over the coming year - and expensive oil means they might - debt repayments would reach dangerous new highs.
King is right to point out that personal indebtedness in Britain isn't nearly as bad as in the US. The proportion of American adults filing for insolvency is three times higher.
But the US not only has escalating household debt, it has accelerating government debt too. That makes the world's biggest economy hyper-sensitive to tighter money. And the old adage still holds: when America sneezes, Britain catches a cold.
So, whether the impact falls on us or our American cousins, rising household indebtedness is a threat to the UK economy as a whole.

In a Miracle Economy, unlike Gordon's facsimile, people can borrow forever against house prices that rise forever in a stable IR enivironment where rates remain low forever. But economic miracles do not exist as the great UK spendaholic public is about to discover.

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  • 302 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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