Borrowings Look Unrepayable — More Closures Coming?
Shops closing, pubs shutting their doors, banks moving away: all too common in West Wales. For most people who are not the retired with final-salary pensions, disposable incomes are squeezed — and the extent of borrowing is at least partly to blame.
Consumer credit in the UK rose 12% in the two years to October 2015, to £177.078 billion.[i] If student loans are included, this colossal amount owed rises to over £250 billion – nearly £9,350 for each of the 26.8 million or so households.
This is not mortgages, or loans secured on property, but unsecured credit.
The total amount of loans outstanding to individuals, including mortgages and student loans, reached about £1.530 trillion, equivalent to over £57,000 for every household – very unequally distributed, of course.
Even if interest rates remain ultra-low, how much of this debt could be paid back? And should interest rates rise, how damaging would be the impact on households’ spending? Whether we like it or not, consumer spending is the pivot around which the whole economy spins.
[i] Bank of England Bankstats, table A5.2, November 30th 2015