Levels of personal debt in the UK are at record levels. The National Association of Citizens Advice Bureaux (NACAB) said over 70 percent of their debt caseload involves debt on bank loans, credit and store cards. There has been a 52 percent increase in personal debt in the past five years. • Total levels of personal debt exceed £158 billion. • Average debt per household was £10,700, while the average income was only £800 per month for Nacab clients. 81 percent of 26-28 year old women are in debt. Andy Kilmister
n December 2001 Martin Wolf, the
chief economics correspondent of the
Financial Times, wrote an article entitled "Britain's seaworthy economy' where he argued that the economic record of New Labour was so good that 'it is natural for British policymakers to feel both relieved and proud'. Less than a year later, on November 11 2002, Wolf returned to the subject, under the heading 'A twospeed economy heading for a crash.
He said: 'this is not an economy chugging smoothly ahead. It is an unstable economy, divided in two.
This turnaround mirrors the increasing unease among capitalist analysts of British economic developments. While overall growth remains faster than much of Europe and Japan, at around 1.6 percent per year, and inflation is still low, such observers point more and more to the deeper imbalances that lie behind these figures.
There are three main imbalances that have hit the news in recent months, all of which are connected. They are the divide between manufacturing and services, the problem of regional inequality and the balance between savings and consumption, of which the problem of pensions is the most
obvious example
Manufacturing output fell by about 25 percent in both 200l and 2002 while services continued
to grow Over the longer term between
1995 and 2002. according to Wolf, the
economy as a whole expanded by 20 percene with services growing by 28 percent
and manufacturing shrinking by! percent.
This fed through into profits with a rate of
return of 4 percent in manufacturing and
14.1 percent in services.
This creates two major problems for
British capitalism in the long run. Firstly, the
manufacturing sector is crucial for exports.
The current account of the balance of payments moved from a rough balance in 1997
to a deficit of 2. 1 percent of GDP in 200l.
This deficit would have been higher if it ACCOUNTANTS AT WORK
Also such improvements as have taken place have been costly in terms of investment.
In April 2002 the Financial Times reported on a study by Alistair McGiven of UBS Global Asset Management, which found the UK had invested almost as heavily in information technology as the USA, but without the productivity gain which had occurred in America. Meanwhile investment in the economy as a whole fell by over 4 percent in 2002.
The weakness of investment and of exports, resulting from slow productivity growth has pushed the economy towards relying on consumers to spend their way out of recession. In addition, current