Following the hard to believe NIESR forecast that the UK was likely to grow quite well in the next year sane voices basing their arguments on reason returned to the economic stage yesterday. As the FT notes:
Charlie Bean, a former deputy governor of the Bank of England who now produces the UK government’s official macroeconomic forecasts at the Office for Budget Responsibility, said on Wednesday that British households were realising their incomes had started to fall and would rein in their spending, potentially leading to “quite a sharp slowdown”. Investment and export demand are unlikely to grow strongly enough to offset a slowdown in consumer spending, he added.
That's short, to the point, and considerably more likely to be right than the NIESR forecast, in my opinion.
Add in a stock market correction that is clearly well overdue, failing car and personal loans and you get considerable bank stress as a result. If this then leads to mortgage risk as households are unable to pay their debts then ten years after the first signs of the Global Financial Crisis of 2007 - 08 emerged all the signs of the next one are just sitting there, waiting to go.
This is, of course, avoidable. We could have a Green New Deal to avert the crisis. But I'm not holding my breath. It didn't happen last time and as yet I can't see politicians doing the right thing this time either. But I can hope.