UK ‘in £55bn hit’ as home loans squeeze spending
THE UK could be £55 billion richer over the next decade if mortgageslave Britons stuck more cash into pensions, an economic think-tank claimed today.
The National Institute for Economic and Social Research’s in-depth study of households over 20 years found those with mortgages typically had a 15% lower private pension income on retirement.
Servicing home debt “crowds out” pension savings, particularly in the first decade after the loan is taken out, it found. But pension savings are also used to fund business investment, where the UK lags other advanced economies by far.
The UK pumps 66% of its investment spending — 9.2% of overall GDP — into business investment, with the rest going into property. But if that share rose to 80%, bringing it into line with the likes of the Netherlands, NIESR’s modelling suggests the resulting rise in productivity would push GDP
£55 billion higher by 2028.
NIESR’s associate research director Monique Ebell said: “UK households’ over-reliance on housing as a form of saving and investment is affecting their own income at retirement, and the UK economy as a whole.” @russ_lynch
Brilliant orange: the Netherlands pumps more investment into businesses than Britain