Global Demographic Change: Some Implications for Central Banks - speech by Charlie Bean

Speaking today at the Institute of Economic Affairs in London, Charlie Bean, Chief Economist and Member of the Monetary Policy Committee at the Bank of England, said that "the immediate economic outlook appears brighter than it has done for a while".
Published on 28 July 2004

There has been much recent media commentary about excessive consumer spending and a "debt time bomb", but Mr Bean notes that "the household savings rate has not been unusually low". He points out that the household debt build-up has been primarily associated with asset accumulation rather than consumption and that is largely a by-product of developments in the housing market: first-time buyers and those trading up the housing chain have been willing and able to take out larger mortgages, while last-time sellers and those trading down have been investing the housing equity thereby released into financial assets rather than spending it. The risks to the outlook posed by heavily indebted households are consequently less significant than has been suggested.

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