That’s life! If you’re worried or actually skint you don’t buy! No amount of lecturing will change that! It was excess spending that got us into trouble!
Any practical suggestions Mr King ?
Christina
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TELEGRAPH 21.9.09
Bank of England warns of the consequences of thrift
An attempt by British consumers to rein in spending after the harsh lessons of the recession could limit growth and therefore depress household income further, the Bank of England warns today.
By Angela Monaghan
It says in its latest Quarterly Bulletin that household decisions to spend or save will have major consequences for the economic outlook, because consumer spending accounts for two-thirds of total spending in the UK.
"Any attempt to reduce consumption is likely to push down on output and hence household incomes. That could actually make it harder for households to increase their savings – known as the paradox of thrift."
The Bank says that even if households saved as much as 10pc of income, it would take nine years to bring wealth back up to the average of the last 20 years.
Credit conditions are likely to remain tight, the Bank says, which could limit spending – as could job insecurity.
The Bank also says that most financial asset prices have continued to increase over the third quarter and conditions in bank funding markets have improved. Improvement in sentiment has prompted analysts to revise upwards their expectations for short-term corporate earnings, coinciding with a rise in equity prices.
It reveals in the Bulletin that, from July 24 to August 4, the Bank did not buy any corporate bonds after receiving no offers in five consecutive auctions. [So QE is now confined to Gilt issues only ! -cs]
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