A REPORT by business research firm Datamonitor says that people in the UK are borrowing on average almost twice that of citizens in other western European countries.
Unsecured UK lending, such as credit cards, was £216bn in 2005 – more than a third of all new non-mortgage borrowing in Europe.
The average British resident owes £3,175. Total UK personal debt, including mortgages, is about £1.4 trillion.
The report, which looks at the market for borrowing via personal loans, hire purchase, credit cards and overdrafts in 16 European countries, said that the UK had an ‘insatiable appetite for credit’.
The average European owed just £1,558 in unsecured debt.
‘Bank of England figures show that outstanding balances on credit cards have gone up by 383% since 1994.’
The average debt of clients seen by the Consumer Credit Counselling Service (CCCS) has risen from £27,566 in 2003 to £33,000.
Paul Marsh, a financial services analyst at Datamonitor, said that the UK market was at saturation point. ‘The UK is an increasingly difficult place to do business, due to the highly indebted nature of the population,’ he said.
The essence of the record indebtedness of the UK population is the bankruptcy of the British capitalist economy. Britain is now breaking all records in terms of balance of trade deficits now annually over £60 billion.
The banks however are making record profits and the City of London is overflowing with cash, and paying record bonuses of astronomical sums.
The reason for their record profits is the export of millions of jobs and the winding up of manufacturing industry in Britain, and the export of billions in capital to make super profits out of super exploitation of workers overseas.
This means that large quantities of commodities that were once produced in Britain are now imported, adding to the annual balance of trade deficit.
Labour governments, throughout their nine years of office, have striven to hold interest rates down in order to encourage millions of people to take advantage of the cheap credit to borrow, borrow and borrow, to spend to keep what capitalist economy remains in Britain afloat.
However, the ‘South Sea Bubble’ of debt is now being undermined at a record rate.
The Bush-Blair imperialist wars have led directly to a colossal inflation in oil and gas prices, which have cut the value of workers’ wages and pensioners’ pensions massively. Now millions, including students, are borrowing just to live, not to buy extras.
The answer of the government to rising inflation has been to use every weapon in its armoury to keep wages down, from sacking 100,000 civil servants to making use of hundreds of thousands of Eastern European workers as cheap labour contract labourers marshalled by legal gangmasters.
However, disaster is now looming. The US economy and its housing property market is slowing down. Tens of thousands of car workers are losing their jobs, as the US government strives to keep the US financially afloat by raising interest rates.
The Bank of England is currently striving to hold off another raise in interest rates, since it could cause a crash in house prices and deprive hundreds of thousands of middle class and working class people of their homes, as well as causing a major rise in unemployment.
However the banks will in the last analysis act in their own interests, since the threat of a run on the pound is now growing as rapidly as is indebtedness.
A crash of the housing market and rapidly rising unemployment will force the government to embark on a massive programme of benefit and wage cuts.
This crisis will unite the working class and the middle class and create the basis of the British socialist revolution. We must make sure that the revolutionary leadership is built to lead it.