Debt growth a better warning signal than levels – BoE’s Broadbent
Ben Broadbent: “It could be that the things that drive speculative, riskier lending tend to develop faster than the fundamentals that determine more sustainable levels of debt”
Debt growth appears to be a better indicator that a crisis may be on the horizon than the actual level of debt, according to Bank of England (BoE) deputy governor Ben Broadbent.
“Even if they went into the 2008 crisis with relatively high levels of gearing, countries with below average growth rates of debt had a less severe experience after the event,” Broadbent said in a speech today (January 23).
High levels of debt might be concentrated in less risky areas, he said, and low interest rates
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