British are borrowing less and saving more
There’s an old Chinese curse along the lines of ‘may you live in interesting times’, the argument being, of course, that after our brief flaming teenage years of partying much too hard, driving too fast and embracing risk, most of us want good, solid, tedious certitude in our lives. Steadily rising house prices, enough inflation to fuel growth, and the gradual erosion of our personal and mortgage debt … that will do nicely. For the journalist though, exciting times are precisely what are required, and they don’t get much more interesting and dangerous than the dying days of Gordon Brown’s premiership. House price collapse, inflation picking up to a trot, the credit crunch, the soaring price of commodities … and a general confusion about where to put our cash for safety let alone growth - financial journalists have rarely had so much to write about or been so much on the front pages.
But amid all the noise about negative equity (in which a quarter of a million Britons now find themselves according to the weekend papers, and with four times that at risk) and the inability to get credit, an interesting little announcement from the British Bankers’ Association lurks buried. The BBA reported that the amounts being deposited by savers in April 2008 set a monthly record. The credit crunch may have reined in the Britons’ thirst for credit, if only by default, but it would seem we have actively rediscovered the savings habit that the more prudent among us thought was gone forever. A piece in this Sunday’s Observer nodded approvingly to Germany. Long derided as boring and slow growth, because of Germans’ reluctance to incur debt (largely assumed to be a race memory from the days of hyper inflation in the 1920s), Germany now sees itself set fair to grow and with no massive weight of personal debt holding it back. ‘When Britons want something they borrow, when Germans want it, they save’ was the quote. So Germans have only recently taken to the credit card, and in much smaller numbers than the Brits.
If the British are borrowing less and saving more, then it’s a welcome return to sanity, though the figures are unlikely to make much of a dent in the repos and bankruptcies that are sure to come in the next few years. More to the point is that we may have learned a lesson. Japan is another country with low debt and no housing bubble, but coming from a very different place than the Germans. The Japanese are just crawling from the wreckage of their own super-inflated economy, which crashed so spectacularly in the last decade of the last century. Property prices there have fallen by up to 80 per cent. The Japanese economy is now starting to grow, steadily, and with most of the toxins purged from its system. Two different countries, at two different stages of the cycle, both with prudence hard learned from inflation and collapse … Could Britain learn their lesson?
