The potential impact of higher interest rates and further fiscal consolidation on households: evidence from the NMG Consulting survey

Quarterly Bulletin 2015 Q4
Published on 15 December 2015

By Philip Bunn and Lizzie Drapper of the Bank’s Structural Economic Analysis Division, Jeremy Rowe of the Bank’s Monetary Assessment and Strategy Division and Sagar Shah of the Bank’s Macro Financial Risk Division.

The balance sheet positions of mortgagors have improved modestly over the past year. Households appear a little better placed to cope with a rise in interest rates than a year ago and survey responses do not imply that a rise in rates would have an unusually large impact on spending. The survey results suggest that the Government’s plans for fiscal consolidation are likely to continue to weigh on household spending.

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