World Economy

Concerns Grow Over UK Economy as Personal Spending Rises

BoE says Britain’s housing market is highly uncertain.BoE says Britain’s housing market is highly uncertain.

In Britain, credit card debt is running at record levels, as the UK puts post-Brexit worries on hold and gears up for bumper holiday season spending.

Growth in combined household debt, a mix of credit cards and secured loans, are together climbing back to levels not seen since the financial crash, according to the Bank of England, CCTV reported.

In Britain, they’re tuning up for the holiday season and what is the biggest retail time of the year. For some, however, it’s beginning to jingle alarm bells. 

Bank of England Governor Mark Carney voiced concern in the Bank’s Stability Report, showing UK personal spending has topped 133% of income. Britain has been on a borrowing binge with rising wage levels and low inflation. Dangerous for individuals and the wider economy, should interest rates rise.

The Bank of England said British households have racked up more than $85 billion of credit card debt, while overall debt is climbing back to pre-crash levels.

Britain’s housing market is also highly uncertain, according to the Bank of England. House prices now on average are four-and-a-half times those of average annual incomes. A healthy consumer confidence is reflected in the numbers, according to some economists.

However, the general outlook for UK financial stability post-Brexit remains challenging,’ according to the Bank of England.

Meanwhile, the Fitch ratings agency affirmed the AA long-term debt rating and negative outlook for Britain and the Bank of England, as they have been since June, IBTimes reported. 

In the wake of the surprise vote in June to exit the European Union, which touched off fears of slower growth, prompting a cut in the debt rating from AAA, Fitch said recent political events suggested Britain likely will seek to control immigration from the EU and reject the jurisdiction of the European Court of Justice. 

“In our opinion, and based on the stated position and interests of the EU, this would make it unlikely that the UK remains a member of the European Single Market after leaving the EU,” the agency said in a statement. 

Those developments also create uncertainty about the economy and new investment. “Fitch assumes that private-sector investment growth will decline in 2017 as firms delay capital spending commitments in the face of the uncertainties about future trading arrangements with the EU and the regulatory environment,” the statement said.

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