We have got back into the national habit of spending money we don’t have. Consumer debt expanded at an annual pace of 6.7% in September – the fastest rate since 2006 – spearheaded by a 7.2% jump in personal loans and overdrafts. Credit-card debt is close to a record high.
The total consumer borrowing figure is at a five-year high, but still 20% down on its 2007 peak, notes the FT’s Gavin Jackson. Deleveraging in the aftermath of the 2008 financial crisis has given people breathing space, while a buoyant labour market is helping to fuel confidence. Record-low interest rates are helping too.
Viewpoint
Before the Brexit vote, Bank of England governor Mark Carney warned interest rates could go up. Six days after, he said they were coming down. Then, in July, he left them where they were. Come August, he cut them, turned on the QE and forecast another cut to come. And now? Well, that cut’s off and he’s warning the next move may well be up because “there are limits to the extent to which above-target inflation can be tolerated”. True, it’s a bit much to expect the Bank of England governor to realise that if you cut rates and “forward guide” more to come, the pound might fall and suck in inflation. But there you go.
Alistair Osborne, The Times