The Guardian reported yesterday that:
Lending falls at fastest rate since credit crunch, Bank says
Unsecured consumer loans drop by 38.7% in first threes months of 2018, largest fall since 2007, according to new figures from the Bank of England
Some is due to tighter lending: some is because consumers are simply asking for less credit.
Add this to reports, also in the Guardian yesterday, that:
London house prices falling at fastest rate in nine years, says Halifax
Lender reports prices down 3.2% between January and March compared with previous quarter
I'd suggest that these two are not a coincidence. That's especially so if a report from Wednesday in the Guardian is noted, which said:
Surprise falls in UK manufacturing and construction point to slowing economy
Three bad reports do not create a downturn. But they most certainly suggest that something is happening. And if debt-driven consumer demand is falling, house price falls mean fewer house sales (and they always do for a while as people are reluctant to sell in such situations) and there is a fall in manufacturing then three key drivers of the UK economy are simultaneously reporting downturns.
In 2015 I said there would be a downturn requiring People's QE before what was then forecast to be a 2020 election, and that Labour would very definitely need that policy if that downturn happened. I still think that downturn likely. I just hope that labour and other parties will then step up and point out that this time austerity will not be needed.
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General stats are misleading. The issue is what kind of growth? Growth for growth’s sake is simply kicking the environmental can down the road. A decline in consumer spending might well be a good thing. Not for supermarket employees, granted, but certainly for plastic-clogged oceans and sustainable agriculture. An increase in home building would obviously be good whereas a decline in house prices is to be welcomed. A continuing decrease in auto sales would also be very good.
The current growth economy is caught between a rock and a hard place. Clearly the country needs to improve its productivity but for the ‘right’ industries and that would depend on one’s political orientation. ‘Frinstance, the arms industry employs thousands and is probably growing but personally I’d be very happy to see it in terminal decline.
The conundrum is how to maintain competitive economic stability while being environmentally and socially responsible. A start would be to more fairly distribute the current wealth. I’m not confident that either of these scenarios is likely so, in agreement with you, I rather suspect there will another economic crash within the next 5 years. As with planting trees, the best time to take action is 30 years ago. The next best time is now!
We may well need a transition
But if we are not prepared for it – and we aren’t – it will be tough
That is my point
John D says:
“A decline in consumer spending might well be a good thing.”
Under some circumstances it might well be. When people are using food banks to make ends meet, quite frankly is not one of those circumstances.
There is a major liquidity crisis at the bottom end of the socio-economic scale and there is NO upside to that. None whatsoever and no good reason for it except malice.
Of itself, I’d say that falls in house prices & levels of household debt were absolutely excellent signs.
I appreciate, however, that the significance for the economy is downwards unless there is either;
a) Govt investment – not going to happen under Phil or
b) A boom in exports – unlikely even with a falling £ as we just don’t make enough of anything, except Scotch, that other people want & Scotch can’t be rushed or
c) Massive inward investment. I understood this would naturally follow Brexit.
Eriugenus says:
“Of itself, I’d say that falls in house prices & levels of household debt were absolutely excellent signs.”
I’m with you there 100%.
House prices are way too high and some people are going to suffer. Either they lose some equity or some bugger else doesn’t get a house. Something has to give. We’ve been here before.
“I still think that downturn likely.”
“likely…?
I think perhaps the word you were groping for there, Richard was ‘inevitable’.