Just take a look at that chart and sit back and wonder. Be amazed and then afraid. This chart illustrates the collective madness that has gripped the UK in the last ten years. UK household debt has increased from around 80 percent of disposible income in 1987 to almost 160 percent 20 years later. In other words, personal indebtedness has almost doubled.
Where is the maximum? Have we reached it, or can the level of indebtedness go higher? Could it go, for example to 200 percent of disposible income. At what level, does it become unsustainable?
There is an old saying that what can not last, will not last. The level of UK personal sector debt has gone too far, and now, this mess needs to be cleaned up. We have reached the point where we either start to pay it back, or we default. Either way, we are heading for hard times.