UK ThinkTank Warns Debt Levels Could Trigger Crash

A growing band of credit-hungry consumers could trigger another financial crash in 10 years as banks, payday lenders and credit card companies add to the debts of low and middle income earners, a leftwing thinktank has warned.

The Smith Institute said policies adopted by the government and regulators since the crash had failed to prevent an escalation of debt among vulnerable younger workers and young families keen to establish a home and live independently.

In a report, Tomorrow’s Borrowers: Personal debt by 2025, the thinktank suggests that urgent action is needed “to stop the UK sleep walking into a major personal debt crisis”.

The report – written before the chancellor, George Osborne, agreed to limit the interest rates charged by payday lenders – concludes that the economic recovery, which has gathered pace since the spring, will not by itself reduce the growing risk that millions of people will become overburdened by debt.

“Personal indebtedness is likely to carry on increasing, with greater levels of unmanageable debt among both low and middle income households,” said the thinktank, which was founded in honour of former Labour leader John Smith.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza