Sinking under a debt mountain

"ANOTHER DAY older and deeper in debt" goes the lyric of the 16 Tons song. Unfortunately, this is an all too accurate description of personal indebtedness in Britain today.

Latest figures show repossessions and debt levels are at a 15-year high with a record 26,000 people becoming insolvent in England and Wales during the second three months of 2006 - a 66% increase on the same period in 2005. The number of personal insolvencies is expected to exceed 100,000 by the end of the year.

But while the high street banks were complaining of having to make provision for more bad debt, they were less vocal about the huge rise in bank profits this year. Barclays, for example, notched up a staggering 37% increase in profits for the first half of 2006, raking in a massive Ł3.67 billion. In fact, the profit per customer at UK banks rose 13.3% in 2005 to Ł75 from Ł66.20 in 2004.

The recent decision of the Bank of England to increase interest rates and a likely further increase later this year will increase the cost of borrowing and push up mortgages and other personal debts. And as the growth in the economy has largely been fuelled by the property market and consumer spending, the signs of a looming recession are becoming clearer.

The hike in oil prices, pushing up inflation and dampening consumer spending, is already having a big impact on cooling the five-year long US property boom, which has been largely responsible for economic growth. Some 43% of all the jobs created in the US between 2001-2005 were in housing construction.

A recession in the US and Britain will further tighten the screws on workers' living standards as the bosses attempt to make us pay for their crisis.

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In The Socialist 10 August 2006:

War and terrorism

Israel out of Lebanon now!