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House of cards.

Document Cited in Related
Vincent
AuthorGraziano, Ovidio
PositionLetters - Letter to the editor

Having debated the credit crunch, its causes and its effects for the past few months, it's now time for us to consider where the economy is heading.

The UK experienced a long period of growth before the crunch, with low-deficit budgets and a relatively stable currency. This was fuelled mainly by lending and the inflation of property values. We then entered a dangerous spiral: more credit offered to nearly anyone equalled more consumer spending equalled more profit equalled growth. As soon as the credit reached the point where it couldn't be extended any further, everything stopped suddenly.

Most of the debt is going to be absorbed by the public. The imminent issues are: what will be the next driver of economic growth? And with which fundamentals: mortgages and credit cards for...

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