Why low UK borrowing might matter more than high UK debt

RICA

Private‑sector borrowing in the UK, by households and businesses, has been strikingly subdued for more than a decade. Since the global financial crisis, new credit creation has remained low, with total private‑sector debt relative to GDP falling steadily. This restraint has acted as a drag on demand and investment but it also creates room. When private borrowing starts from a low base, it can rise without necessarily sparking instability.

Credit cycles have always mattered to real economic performance. When new borrowing picks up, it tends to drive consumption, business activity and GDP. The absence of this cycle over the past decade has contributed to the UK’s stagnation. But the environment may be changing. Rates have peaked and are expected to fall. Household and corporate balance sheets look more robust. And there is political pressure, ahead of a general election, to shift the tone on growth.

This combination means conditions are aligning for a potential increase in private credit. If that happens, it would not take much to shift growth expectations higher. The market’s focus on fiscal constraints may be missing a more dynamic lever.

Ruffer Investment Company Limited (LON:RICA) is a British investment company dedicated to investments in internationally listed or quoted equities or equity related securities

Share on:
Find more news, interviews, share price & company profile here for:

Latest Company News

Private credit risk demands investor attention

Private credit is becoming a more direct risk for investors as funding pressure, leverage and consumer weakness move further into focus.

Agricultural commodities look mispriced as fertiliser risk builds | Ruffer Investment Company

Jasmine Yeo of Ruffer says agricultural commodities may be underpricing the fertiliser shock created by the Strait of Hormuz closure.

Ruffer Investment Company delivers positive year-to-date gains

Ruffer’s NAV total return was up 1.2% year to date, with the share price rising 4.5%. Over one year, NAV total return increased 6.4% and the share price gained 11.0%, supported by positive equity contributions in May despite a drag from protective derivative positions.

Risk looks different when investors stop following the crowd

Investors should be wary of confusing consensus with safety, because the easiest decision to defend today may carry the greatest risk tomorrow.

Credit conditions could shape the next market opportunity

Improving credit conditions could become a key signal for investors looking for the next turn in growth-sensitive markets.

Ruffer challenges investors to rethink what safety means

Ruffer warns that investors may be mistaking familiar holdings for safe ones as market concentration, inflation and policy uncertainty reshape portfolio risk.

Search