Newspaper article The Journal (Newcastle, England)

A Catalyst to Re-Assess the Household Budget

Newspaper article The Journal (Newcastle, England)

A Catalyst to Re-Assess the Household Budget

Article excerpt

Byline: By Jane Hall

On Wednesday the National Office of Statistics revealed that the average unsecured debt - which excludes mortgages - had soared by more than 50pc since 1997 to stand at pounds 5,330.

Then yesterday, after nearly four years of falling base rates, they went up by a quarter of a point.

And today the Department of Trade and Industry's insolvency statistics are published, covering the third quarter of this year. The timing couldn't be worse as the interest rate rise - widely tipped to be the first of several over the coming months leading to the end of the housing boom - will undoubtedly see an increase in company failures, and personal bankruptcies.

Some City economists are now pencilling in base rates of 5pc - meaning a typical mortgage rate of 7pc - by the second half of next year, enough to add hundreds of pounds to monthly mortgage bills.

The Bank of England's strategy over the past 31 months has been to jolly along the consumer to keep the economy ticking over through war in Iraq, the stock market collapse and tax increases. …

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