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Brits are spending more than they earn. Uh-oh.

Low interest rates used to mean debt was kinda affordable. Now interest rates are going up. 

Low interest rates used to mean debt was kinda affordable. Now interest rates are going up.

What it means: It’s not necessarily a bad idea to borrow money. Governments do it all the time, and some people think if they did more of it we’d all be better off. Millions of Brits borrow money to go to university or buy houses, and any of us who own a credit card use debt to buy everything from holidays to frappuccinos to the latest economic bestseller (or is that last one just us?).

But debt is a problem if you can’t pay it back. Which is why it’s very much Not Good that for the first time in about 30 years, UK households are spending more than their earn. That’s according to the Office of National Statistic (ONS), who also says that people are borrowing so much because banks have set really low interest rates since the 2008 financial crash. The interest rate is the price you pay to borrow money, or the payment you receive when you stash your savings at the bank. When interest rates are low, people are encouraged to save less and borrow more.

But now the Bank of England has put interest rates up, from 0.5% to 0.75%. That means loads of people with debt (including some mortgages) are suddenly having to cough up more money.

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Reader Comments

  • WhereAreTheVikings

    What a terrible, terrible shame. Western Civilization nurtured capitalism, and now capitalism is destroying it. And these young people seem to welcome the invasion of their homeland. The media and schools have been very efficient in wiping out all traces of blood and soil.

    • prollawalllynotahumanoid

      Capitalism isn’t the problem. It’s corrupt politicians taking bribes and kickbacks from Globalists and the Chinese.

      • WhereAreTheVikings

        Maybe I should have said crony capitalism. Although Italians importing Chinese to make “Italian leather” shoes is not crony capitalism. It is capitalism, pure and simple.

        • prollawalllynotahumanoid

          That would be crony capitalism and globalism combined. They aren’t concerned with the affect their policies have upon their citizens, the health and welfare of their society and culture or their economy. What it isn’t is fair-free trade to further national interests.

          • WhereAreTheVikings

            I’ve always seen them as one and the same, but perhaps they need to be named individually, just to bring home the point.

      • WhereAreTheVikings

        But now that travel is so easy and borders are virtually down through H1bs and the like, theoretically you can’t blame capitalists for the pursuit of cheaper labor, although I do heartily blame them not being more patriotic than that. Perhaps the emerging nationalism will force them to voluntarily do what they should have morally been doing all along, and that is employing business practices that preserve their countries and nationalities. The government should be doing everything it can to encourage that, to the extent that small government should do anything but guard the borders and strictly, drastically, limit immigration.

      • Henry Lam

        It is China with its corrupted mindset affecting the world.

        • prollawalllynotahumanoid

          No it is not. Capitalism is the fairest and least corrupt system of all.

          Socialism and communism is based on authoritarianism, coercion and police intimidation. It has and always will be rife with criminality, bribes and kickbacks.

          Corruption can be anywhere but it is the very basis of socialism and communism.

    • Henry Lam

      The government is too weak. They do not understand the mindset of communists and how they educate their people. Those communist people are only loyal to their country and could be dangerous. The immigration law should only accept those who accepted multiculturalism and taught from a democratic education system. This virus events clearly has shown how stupid to take China as a friend.

      • WhereAreTheVikings

        The government is not too weak. Just weak-minded about some things.

  • Gabi Rodrigues

    For how many days can a country maximum close their borders to foreigners maximum? Like now, with the virus, everyone is using 30 days. Can it be more?