The leader of the Liberal Democrats Sir Vince Cable has raised concerns over the levels of savings among consumers in the UK, which he says has reached the point of “no net saving” for the first time since 1988.
In an opinion piece written exclusively for Credit Strategy ahead of Credit Week, Sir Vince warned that “not even in the run-up to the financial crash, when banks were offering mortgages worth more than the value of the property, were people borrowing at this level”.
However, unlike the last financial crisis in 2008, he suggested that the banks would not be as exposed, with the pain primarily borne by consumers.
When the Bank of England performed its annual stress test last year, none of the banks it monitored were required to raise extra capital.
Instead, Cable noted, the poorest 10 percent of households spend around two and a half times their income each year.
“It is these people that are most under threat: those who rely on payday lenders and rent-to-own shops to get by between paycheques,” Cable wrote. “They will most harmed if the economy weakens or if interest rates rise. And they are the ones who bear the worst consequences of unsustainable debt: mental health problems, family relationships under strain, rent arrears, reliance on foodbanks.”
To read the full opinion piece, click here.
Sir Vince Cable is speaking at the Parliamentary Reception as part of Credit Week, while fellow Liberal Democrat Baroness Kramer will be speaking at the Credit Summit. To book tickets, visit the Credit Week website.