Evening Standard: "Household debt will decide UK recovery"

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"Do British households have too much debt? Or to put it another way, do British households feel they have too much debt to allow them to start spending? On this question hang the prospects for our economic recovery.

"Opinions on the issue diverge. The Treasury’s official forecaster, the Office for Budget Responsibility, seems to take the view that the great wave of household deleveraging is abating. ...

"However, not everyone agrees with this sanguine forecast. The International Monetary Fund, in its most recent comprehensive report on the UK economy, argues that deleveraging by British households probably has further yet to run. More ominously, it sees house prices as overvalued by 10-15%.

"...  The Chancellor’s state home-buying guarantees for first-time buyers with small deposits, announced in the March Budget, look irresponsible given the possibility that the housing market could well have a correction in store. A 5% slide in house prices would put these new buyers in negative equity. 

"A more prudent alternative to the problem of young families priced out of the housing market would be, instead, for the Government to boost the housing supply by sponsoring the construction of more homes."