UK’s economic growth built on unsustainable foundations, new studies say

Britain’s 15-year economic expansion is built on unsustainable foundations that are becoming more exposed as homeowners’ finances are stretched ever tighter, two reports have claimed.

Gabriel Rozenberg, Economics Reporter, The Times - 20 December 2007

Policy Exchange, the centre-right think-tank, says today that the UK’s unprecedented period of consistent growth and low inflation is “more mirage than miracle”. It argues that Britain’s record is worse than its rivals’ and is too reliant on erosion of savings and on rises in debt and immigration.

The report comes as Alliance & Leicester, the mortgage bank, gives warning of deterioration in many households’ finances. Savings rates of mortgage-holders have deteriorated far more quickly than have those of people without mortgages, it said. - Oliver Marc Hartwich, the Policy Exchange chief economist and lead author of the report, said: “Other European economies have recently embarked on a process of economic modernisation.

However, the UK’s tax, spending and regulation policies have gone in the other direction. We need to find more sustainable foundations for our future economic prosperity than house prices and debt.” - full article