“Ultra-low interest rates in response to recession… encourage more debt to be taken on,” says David Smith in The Sunday Times. Britain’s households worked off some of their borrowings after the global crisis, but now they have returned to shopping with money they don’t have.
Consumer credit is growing at an annual pace of more than 10%, compared with around 5% in pre-crisis 2008. Consumer debt as a proportion of GDP, higher here than the average for rich economies, is heading back to its peak – making households especially vulnerable to higher interest rates.