Proper blogging will resume at the weekend but today I just wanted to post another graph – one I find especially striking – and try to bring together what these four graphs (posted this week) show us.
Mortgage Equity Withdrawal as a percentage of household post-tax income since 1971, the clearest way to see the UK credit cycle in operation.
Put it all together and we can see that the UK has serious problems – even leaving aside the government’s fiscal tightening. We have a Labour market which isn’t expected to recover to pre-recession levels until post 2016, we have private business investment that is still nearly 20% below pre-recession levels and seems to be stagnating and we have real wages that have been falling for almost 18 months.
Now of course the government’s plans will merely compound this – putting more people out of work, adding to the squeeze in living standards & doing very little (other than cutting corporation tax and crossing their fingers) to deal with the shortage of business investment.
But today’s chart reminds us of something else – that the problems of theUKeconomy pre-date 2008.