Despite difficult economic times and the persistence of tight credit conditions, latest OBR projections suggest that aggregate household debt is set to increase by around one-quarter between 2011 and 2017. With many commentators expecting interest rates to start climbing back upwards from 2015, the ability of households to service their credit commitments will depend critically on the future trajectory of income growth across the distribution. To date there has been little analysis considering the number of households who may struggle with their debt burden depending on the what happens to living standards and interest rates. Matthew Whittaker will present new Resolution Foundation analysis that explores the potential scale of repayment difficulties that households might face in the coming years under different scenarios for disposable income growth.David Miles (Bank of England), Kate Barker (Office for Budget Responsibility), and Gillian Tett (Financial Times) will respond, providing insights into the potential policy responses the government, the Bank of England and financial institutions might choose to pursue. Stephanie Flanders (BBC News) will chair the event. This event is part of the Resolution Foundation’s Deconstructing Debt project that will consider the implications of household debt as well as possible options for paying down debt that will both support families and help facilitate a return to sustainable economic growth. We will be publishing further research and hosting a series of debates during the project to explore options for sustainable household deleveraging.
