Socialist Worker

Record numbers deeper in debt

Issue No. 1830

WORRIED ABOUT paying the credit card bill off after Christmas? You are not alone. There are now record levels of debt in Britain. The government and so called economic 'experts' may tell us we are enjoying a consumer boom.

But, as a new study points out, the reality for millions of people is mounting debt and all the anxiety and worry that brings. Economists working for the HSBC bank have found in particular that people are remortgaging their homes.

People are getting bigger mortgages on the back of rising house prices and spending the money on consumer goods which they could not otherwise afford. Over £4 billion a month is being raised through remortgaging in this way. This amounts to 5 percent of total economic output. When this figure is put together with the cash raised in loans, this debt adds up to 11 percent of consumer spending.

That is the highest level since a short period in 1988. That year was quickly followed by a sharp recession. Borrowing now shows no sign of slowing. House prices are continuing to rise.

And, with wages for most of us barely rising above inflation, people feel forced to go into debt to buy the goods they need. The rising level of debt also leaves hundreds of thousands of people vulnerable to any slowdown in the economy.

A fall in house prices will leave them facing the nightmare of having a mortgage greater than the value of their home. This also makes the whole economy even more unstable.

Economists at HSBC are calling for the government to take action to 'dampen down' house prices and remortgaging. But doing that risks triggering a very sharp recession indeed. Even a slight economic slowdown will force people to cut spending drastically to make debt repayments.

This could cause a spiral downwards to economic crisis. This latest research shows most of the growth in consumer spending this year has depended on spiralling debt.

The economy shows all the signs of the boom-bust cycle that chancellor Gordon Brown claimed to have magicked away.

Rich men in wigs

TOP JUDGES are the same white, male, and public school educated elite as they were a decade ago. And, according to a survey by the Labour Research magazine, things have got worse under Tony Blair's 'modernising' regime. Two thirds of the judges appointed or promoted since Labour came to office are public school educated. Two thirds of all judges are still public school educated. Less than 1 percent of judges are from an ethnic minority, and over 90 percent of judges are men.

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Sat 14 Dec 2002, 00:00 GMT
Issue No. 1830
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