Ann Pettifor, director of Prime Economics, has eloquently punctured the myth that the economy is improving – with a great soundbite calling Britain an “Alice in Wongaland” economy (after the payday loan company Wonga) in the BBC’s Today programme on Thu 15th Aug 2013.
Ann Pettifor is an economist who predicted the crisis in 2006 (“The Coming First World Debt Crisis”).
She warned that the improved figures were fuelled by debt and will ultimately prove to be “unsustainable”.
She also warned that the government’s Help to Buy scheme, under which people can take out government-backed mortgages to buy new homes, will create another “bubble”.
“We are making people think they can buy another property and taking out mortgages which they simply can’t afford in the long term. Those prices will fall at some point.”
“I think it’s artificial and can’t be sustained. People’s incomes are falling in real terms, and have done so for five years. Now there’s been this sudden, go on let’s just go made because everyone says its recovery.
“At a fundamental level it’s quite dangerous because household debt is still 153 per cent of GDP.
“There’s nothing seriously underpinning this recovery, and that’s why it’s Alice in Wongaland, the confidence fairy is out there.”