Financial Experts Concerned Summer Bump May Be Loan-Fueled
Supermarkets largest gainer in what some say is a debt-driven mini summer boom
In the latest evidence of economic prosperity, ,the Office for National Statistics (ONS) said retail sales increased by 1.1%, after a 0.3% rise in June, as the heatwave set the tills ringing.
Following the strong economic indicators, there were growing debates regarding the upturn, and whether it was a debt-fueled boom or an actual resurgence for the economy.
Ann Pettifor, an economist who predicted the events of the 2006 recession start in a book, The Coming First World Debt Crisis, stated that with the average wages still in a free fall, there is strong reason to believe evidence of the debt-burdened consumer is still struggling under payday loans.
Pettifor noted that George Osborne had essentially abandoned his plan to create a “march of the makers”, and instead turned to pumping up the housing prices with “Help to Buy” policies.
"I think we're creating more asset bubbles. We haven't restructured the banks; we haven't rebalanced the economy; we haven't boosted investment: what on earth do we think we're growing this recovery on? There's nothing seriously underpinning this recovery, and that's why it's Alice in Wongaland, the confidence fairy is out there."
In July, the ONS was strong across a range of sectors which included both food and clothing. "Feedback from supermarkets suggested that the sunny weather boosted sales across a range of products including food, alcohol, clothing and outdoor items," it added.
Overall, sales rose 3% above the mark from last year's marker in the same month. Food was the largest gainer with stores witnessing a 2.5% jump over the month.
Eimear Daly, head of market analysis at foreign exchange firm Monex Europe, said: "While the data will be taken as confirmation that the UK economy is gathering momentum into what is becoming an entrenched recovery, it also highlights a huge risk. This growth is the result of debt-fueled consumer spending, underpinned by a drop in the saving ratio and higher house prices."
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