The British Evasion
by Nicole Gelinas
- When the financial hurricane struck in 2008, Britain found itself in a crisis very much like the American one.
- A giant credit bubble had fueled an unsustainable rise in the price of real estate.
- British homeowners, feeling rich, had spent and spent, pushing up their household debt to a staggering 106 percent of GDP, up from 61 percent just eight years earlier.
- When the bubble burst, hitting house prices and making people feel poorer and afraid, British consumers went on strike; employers promptly imitated them, and the United Kingdom lost 1.6 percent of its jobs between 2008 and 2009. (America, with its easier hire-and-fire culture, lost 5 percent.)
- With bubble-era tax revenues gone, a British government deficit that had seemed manageable became cavernous, expanding from 3.5 percent of GDP over the 2004–08 period to 11.5 percent in 2009.