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Household savings amongst UK citizens are now at lower levels than before the last financial crisis in 2008, and debts levels have crept up to dangerously high levels, with British consumer adding debt at a faster rate than their wages are rising.

We are once again producing a debt bubble that must be reduced, one way the problem is being tackled is the changing of lending criteria to be more stringent, but this is not enough alone and the Bank of England Governor, Mark Carney knows this and is looking at further ways to deflate debts levels before they become too big to handle.

One way to tackle the problem that is staring us right in the face is to raise the minimum wage, this would also cut the wheat from the chaff as far as UK businesses are concerned forcing capital away from marginal businesses that only exist because wage levels are low.

The investment would instead be channeled into businesses whose profits are big enough to absorb wage increases. The resulting wage inflation will require BOE to raise interest rates. Thus the bubble ends.

The decision by the Bank of England last week to keep interest rates where they are at 0.25% is not helping, they have been at near zero levels for far too long and much longer than anyone in the financial sector expected.

Mark Carney know that if this interest rate does not change soon we standing on the precipice of debt bubble inside the UK economy.

With savings at extremely low levels if the bubble were to burst this is not a situation the citizens of the UK are ready or equipped to deal with.

This means that the BOE is taking a long hard look at where the debt lies and how bad the debt is, one area that is causing concern is the UK car finance sector.

Personal contract purchases – a type of rent-to-buy agreement – allow drivers to own cars while paying less than the total price of the car at the beginning of the contract. And that is creating a supply of high-quality used vehicles which is greater than the entire aggregate demand for new cars in Britain in some years.

What has been the response of the finance sector? To bundle all those car loans together and sell them as asset-backed securities.As Morgan Stanley analyst Harald Hendrikse told Business Insider recently, “The mechanics of the situation are exactly the same” as the mortgage crisis. “We are repeating exactly the same problems in the US and the UK specifically that happened with the mortgage market in 2007,” he said.

Right now the BOE and Mark Carney are stuck between a rock and a hard place as they believe the UK economy is not strong enough to withstand a rise in interest rates, but this is sorely needed before the debt bubble bursts.

It is time for some ‘Darwinism’ survival of the fittest with UK companies to see which of those sink or swim with the interest rate rise, to see which have real underlying assets or reasons for organic growth or just depend on cheap credit to keep going.

Those with savings in the UK deserve better from the BOE, they have worked hard for the money they have squirreled away and the interest they get at the moment is an insult and to coin the phrase “at least Dick Turpin wore a mask.

It is time to do what needs to be done.

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