"ANOTHER DAY older and deeper in debt" goes the lyric of the 16 Tons
song. Unfortunately, this is an all too accurate description of personal
indebtedness in Britain today.
Latest figures show repossessions and debt levels are at a 15-year
high with a record 26,000 people becoming insolvent in England and Wales
during the second three months of 2006 – a 66% increase on the same
period in 2005. The number of personal insolvencies is expected to
exceed 100,000 by the end of the year.
But while the high street banks were complaining of having to make
provision for more bad debt, they were less vocal about the huge rise in
bank profits this year. Barclays, for example, notched up a staggering
37% increase in profits for the first half of 2006, raking in a massive
£3.67 billion. In fact, the profit per customer at UK banks rose 13.3%
in 2005 to £75 from £66.20 in 2004.
The recent decision of the Bank of England to increase interest rates
and a likely further increase later this year will increase the cost of
borrowing and push up mortgages and other personal debts. And as the
growth in the economy has largely been fuelled by the property market
and consumer spending, the signs of a looming recession are becoming
clearer.
The hike in oil prices, pushing up inflation and dampening consumer
spending, is already having a big impact on cooling the five-year long
US property boom, which has been largely responsible for economic
growth. Some 43% of all the jobs created in the US between 2001-2005
were in housing construction.
A recession in the US and Britain will further tighten the screws on
workers’ living standards as the bosses attempt to make us pay for their
crisis.
