By Glenn Hoggarth of the Bank’s Financial Intermediaries Division and Alec Chrystal of the Bank’s Monetary Assessment and Strategy Division.
In this article, we examine various key financial indicators relating to the UK personal and corporate sectors in the 1980s and 1990s. The financial health of the personal and corporate sectors is potentially important as a leading indicator of changes in consumption and investment spending. When households run into financial difficulties, they are likely to cut back on spending plans. Firms in financial difficulties will postpone or cancel investment projects.