The UK’s everyday debt economy

A brief summary:

Over a period of six months we investigated non-state and non-market sites of debt resilience in the UK and, in doing so, observed the new everyday political economy of indebtedness. We found that civil society organisations seek to fill the policy void created by government inaction by generating meaningful data on household debt and engaging directly with households, as well as community groups, to articulate a wider politics of debt.  In this way, civil society groups make visible the many ways households create the UK’s debt economy.

The political shift to ‘Austerity’ following the 2008 financial crisis only contributes to worsening household indebtedness.  Austerity supports simultaneous household and state deleveraging – or paying down debts – in order to repair the damage caused by pre-2008 credit-fuelled profligacy. In practice, public policy now directly promotes personal and household debt as a means to replace public spending.  In most instances debt is downloaded on to households with the aim of reducing public debt.  However, as the latest budget figures show clearly, public debt levels in the UK are not going down, while household debts continue to increase year-on-year.  It is becoming more and more apparent that ‘Austerity’ exacerbates the underlying problems indebtedness fosters.

Against this background, the New Politics of Indebtedness report applies an everyday political economy lens to evaluate rising household debt levels.  This bottom-up approach shows clearly how stagnant wages meet easy credit, which in turn creates the current policy status quo: insecure employment, stagnant private and public sector wage growth, continued debt-led investment in the residential housing market and consumption to bolster GDP growth figures.  Household debt makes this possible, which is why there is no policy or strategic plan to do something about it – even though indebtedness is contributing to wider societal and political economic problems.

There is, in fact, a stark hypocrisy at the core of the current official ‘Austerity’ agenda: the government wants to impose austerity on households, but expects them to take on more (expensive) private debt so it, the government, can pay down the public debt.

Dependence on this debt economy also explains the public policy void: very little is being done to understand or address the problems precipitated by widespread household indebtedness.  Why so?  Because the entire economy is dependent on it continuing unabated! This creates a fundamental double-bind for UK households and the wider economy and at the same time highlights the great ‘strategic silence’ at the heart of the contemporary political economy of the UK.

If every household struggling with debt decided to pay down its debts, the UK economy would be plunged into depression, with the global economy following closely behind.  However, if every household struggling with debt continues to take on more debt to maintain its standard of living, then soon there will be mass insolvency.