I've long questioned the quality of the UK economic recovery as regular readers will know, with household debt rising as the nation once again borrows its way out of trouble
You'd have thought we had learnt our lesson from the 2007-2008 crash but no. That would be asking far too much.Why save when you can borrow, especially at these cheap rates. Rising house prices have once again got a lot of households out of trouble but has that stopped them taking out more equity again? Naaaaaah.
Now our dear friend and loyal ForexLive reader/commenter Chef (aka David) brings my attention to an article in today's Telegraph by Jeremy Warner which compares the debt fuelled crisis of Greece to the debt fuelled "recovery" in the UK
Support for this view is found in a number of worrying aspects to the latest data. Consumption growth is once again running ahead of income, while the first quarter current account deficit is a shocking 5.8pc of output.
"Ever more insistently, the statistics point to a return to the old, unbalanced form of pre-crisis growth - highly reliant as it was on debt-fuelled consumer and government demand - and of a country that continues to live substantially beyond its means"
In its annual report this week, the Bank for International Settlements made the following observation: That economies must "rely less on demand management policies and more on structural ones, so as to abandon the debt-fuelled model that have acted as a political and social substitute for productivity-enhancing reforms. Short-term gain risks being bought at the cost of long term pain."
Read the full article here
