REPORT: Hangover Cure

Dealing with household debt as interest rates rise Find out more

BRIEFING: All accounted for

The case for an ‘all-worker’ earnings measure Find out more

Universal Credit review

Expert panel to consider extent of change needed Find out more

Blog & Articles

Once interest rates start rising, how can indebted households be helped through the painful transition?

24 July 2014 | Gavin Kelly

Whether it is this autumn, the New Year or shortly after next May’s election, everyone knows that interest rates are going to start rising sometime ...

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Living standards: what happens next?

15 July 2014 | Matthew Whittaker

Going into next year’s election – the ‘living standards election’ – party political strategists are likely to fret about the length of voters’ memories. When ...

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Gavin Kelly at CIPFA conference

8 July 2014

Gavin Kelly is interviewed at the Chartered Institute of Public Finance conference.

Commission on Living Standards

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Hangover Cure: Dealing with the household debt overhang as interest rates rise

The UK is entering a period in which interest rates are expected to start rising again – with the first moves potentially coming later this year – having insufficiently dealt with the debt overhang. This leaves the UK economy vulnerable to even modest increases in interest rates.

Deconstructing the debt overhang will not be costless, but it is in everyone’s interests – borrowers, lenders, government and taxpayers alike – to adopt a pro-active measured approach rather than simply allowing it to collapse. We favour an orderly and managed dismantling of the debt overhang. This report sets out a series of recommendations for lenders, borrowers and policy-makers to make that happen.



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