UK Debt Crisis Is Here – Consumer Spending, Employment and Sterling Fall While Inflation Takes Off
By: GoldCore
GoldSeek.com
Wednesday, 15 November 2017
– UK debt crisis is here – consumer spending, employment and sterling fall while inflation takes off
– Personal debt crisis coming to fore – litigation cases go beyond 2008 levels
– October consumer spending fell by 2% in October, the fastest year-on-year decline in four years
– Britons ‘face expensive Christmas dinner’ as food price inflation soars
– Gold investors buying physical gold due to precarious UK and US outlook
The long heralded UK debt crisis is here and data released in the U.K. this week clearly shows this.
This is seen in UK retail sales and consumer spending which plunged in October, employment falling, pay stagnant and inflation ticking higher as sterling remains under pressure.
Yesterday, official UK figures showed prices were up by 4.2% last month on 12 months earlier, the highest level in four years. Britons ‘face expensive Christmas dinner’ as food price inflation soars reported The Guardian yesterday.
Meanwhile stock markets make new highs every week but the underlying economic data is not reflecting the “irrational exuberance” being seen in global stock markets.
Increased litigation as consumer debt climbs
Personal loans are becoming increasingly dangerous and more bubblelicious than even the stock market.
We have outlined a few times how UK consumer debt levels are at dangerous highs risking a new UK debt crisis. Recently Standard & Poor’s raised their own concerns regarding the rapid rise in UK consumer debts.
The rapid rise in UK consumer debt to £200bn from car finance, personal loans and credit cards is unsustainable at current growth rates and should raise “red flags” for the major lenders, ratings agency Standard & Poor’s has warned. – The Guardian
The high levels of debt are down to easy monetary policy, according to the standards agency:
Loose monetary policy, cheap central bank term funding schemes and benign economic conditions have supported consumer credit supply and demand.
However this is unsustainable and major lenders should be on high alert due to the low levels of repayments. The situation is now so bad that the number of cases taken to court over late payments have reached levels higher than those seen in 2008.
As explained in the FT:
Consumers who refuse to repay their debts are increasingly being taken to court, with litigation at levels last seen in the run-up to the 2007-08 financial crisis.
New figures show there were 910,345 county court judgments in the nine months to the end of September. This is an increase of 34 per cent per on the same period in 2016, and compares with 827,000 in the whole of 2008, at the onset of the financial crisis.
The rise in court judgments is another indication of the high levels of unsecured debt weighing on British consumers, with Bank of England data showing that borrowing through credit cards, overdrafts and car loans has topped £200bn for the first time since the global crisis.
All of this is despite low unemployment levels and an apparent increase in real incomes. The Daily Mail provided an interesting snapshot of where some of the excess debt is coming. Namely in the form of car loans which are almost mimicking the subprime market seen in the run up to 2008:
The Rest…HERE
