Bursting Housing Bubble in UK Causing Personal Insolvencies

May 10 (EIRNS) - Personal insolvencies in England and Wales are up 60% from 2005, and insolvencies in the first quarter this year are up 24% from a year ago. This poses, according to the Wall Street Journal , a threat to the U.K. economy, "reliant as it is on consumption for nearly two-thirds of its output."

A key item in the picture is skyrocketing home prices, which have more than tripled in the past 15 years. Home repossessions in 2006 increased 65% to a 6-year high; this is still low by historical standards, but experts expect an increase. Because a larger and larger proportion of income is going to mortgage payments, individuals are taking on more debt to meet day-to-day expenses. According to the OECD, U.K. household debt as a proportion of income has hit 159%, compared to 135% in the U.S.