Much of what you need to know about household debt can be explained by the grocers Stephen Blackman,...

Much of what you need to know about household debt can be explained by the grocers

Stephen Blackman, RBS Economics

MAS Conference, June 5th 2014

External Version

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“Lidl discount supermarket plans to double UK stores” – “new era”BBC News Dec 2013

“Waitrose targets £15bn sales in 10 years”Telegraph Oct 2013

Meet Jane and Scott

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They live in Dundee with their two young children

1 in 5 households (5 million)

Earn £32,000

Pay £4,600 in taxes

Receive £5,000 in child benefits

Mortgage debt of £88,000

6th richest household

Spend 93p in every £1 on life’s essentials

Income unchanged since 2004

Unsecured debt of £4,600

14p in every £1 of income is a cash benefit

Source: ONS Tax and Benefit Data; ONS WAS; ONS Family Spending; ONS ASHE – all various years

Our productivity programmes in the UK still have huge potential, not least through the use of technology.

Technological innovation isn’t going away

Globalisation isn’t going away

… we source more than 60% of all clothing and 40% of other non-food items through the global sourcing office.

Big change in the jobs we do

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Personal Services

Sales

Elementary

Admin

Manufacturing

Semi-professional

Professional

Managers/Senior Officials

35

-1

1

-16

-18

24

30

32

Change in proportion of jobs since 2001 (%)

Source: ONS LFS

Almost all UK private sector debt is held by households

Mortgages Loans Businesses

£1,200bn£159bn

£382bn

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UK private sector debt

Source: BoE Bankstats (Excludes OFIs)

Home ownership rates are falling

1996 2003 2011

60

55

42

9

Proportion of middle-income household buying with a mortgage (%)

Source: ONS Tax and Benefit Data

Changes are affecting us all

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Paul (40). 2 million households

Earns £16,000, receives no benefit


Mark & Claire (40s). 2 million households

66p of every £1 of income is a cash benefit


Sarah & Chris (30s). 3 million households

£64,000 after tax.

But having children may change fortunes

Unsecured debt of £4,750, mortgage of £120k

Source: ONS Tax and Benefit Data; ONS WAS; ONS Family Spending; ONS ASHE – all various years

A word from our lawyers

This material is published by The Royal Bank of Scotland plc (“RBS”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by RBS and RBS makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of the RBS Group’s Group Economics Department, as of this date and are subject to change without notice. The classification of this document is PUBLIC. The Royal Bank of Scotland plc. Registered in Scotland No. 90312. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. The Royal Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. © Copyright 2013 The Royal Bank of Scotland Group plc. All rights reserved

Much of what you need to know about household debt can be explained by the grocers Stephen Blackman,...

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