LONDON — Labour MP Rachel Reeves, head of an influential parliamentary committee on business
, added her voice to the growing chorus of alarm on consumer debt in the UK.
Reeves, who was an economist with HBOS during its bailout at the heart of the financial crisis, told BBC Radio 4’s Today programme that issues surrounding debt that emerged during the crisis are “rearing their heads” once more, and warned that Brits and regulators must remain “forever vigilant.”
“I do worry about the growth of some of those issues we saw in the mortgage market in 2008 now rearing their heads in unsecured lending and in car purchases,” Reeves told the show’s hosts.
“We’ve got to be forever vigilant. We’re not going to have the same crisis as in 2008, but there are risks building up in the financial services sector as well as in household debt.”
Reeves’ comments echo those of Alex Brazier, the Bank of England’s executive director of financial stability strategy and risk at the central bank, also made this week.
In a speech on Monday evening, Brazier highlighted the danger of “excess” when it comes to borrowing, noting that outstanding car loans, credit card balance transfers and personal loans have all increased by more than 10%. Over the same period, household incomes have only risen by 1.5%, Brazier added.
“Household debt — like most things that are good in moderation — can be dangerous in excess. Dangerous to borrowers, lenders and, most importantly from our perspective, everyone else in the economy,” he said.
Reeves spoke to Radio 4 in her new capacity as BEIS committee chair, taking over from Iain Wright, who stepped down as an MP at the general election.
Wright spearheaded a period of intense scrutiny of businesses during his time as committee chair, leading inquiries into both Sports Direct and the collapse of BHS, both of which hit headlines, and prompted major changes.
She said that she hopes to adopt a similar style, and continue with inquiries that are “really powerful” and under her predecessor “actually changed behaviour in some cases.”