"Even if we take a somewhat rosy view of how the economy will develop over the next few years the number of households severely exposed to debt looks as though it will double"
- Matthew Whittaker, the senior economist at the Resolution Foundation
John Cridland, director general of the CBI, the U.K.'s main business lobby group, believes that too many Britons are "stuck" in minimum wage jobs, despite steady economic growth. Cridland argues that companies have to ensure better salary and more opportunities for their employees. He said that most businesses would increase their workforce in 2014 for the first time since the recession began.
This statement was made after the Resolution Foundation said that millions of U.K. households will face risky levels of debt when interest rates start to rise. The number of people using more that half of their disposable income to repay debt might increase from 600,000 to 1.1 million by 2018, if interest rates advance to 3%. In case rates jump to 5%, two million households would face enormous repayments, with mortgages being the largest source of U.K. household debt. The Bank of England has been maintaining interest rates unchanged at a record low of 0.5% since March 2009. Mark Carney, the BoE Governor, pledged that the interest rates will be kept on hold even after the unemployment rate reaches the target of 7%. Rate hike will only be considered, when there will be threat to the nation's economy from high inflation expectations, as currently Britain's economy needs sustained low interest rate environment to boost growth and restore the stricken banking sector.
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