What can't go on for ever...

The Brits are also riding on the roller-coaster of a housing-fueled spending frenzy on credit. They're a little ahead of us on the curve though, so expect to get a dose of what they're getting now shortly in the United States. Their property bubble has definitely sprung a leak, and the combination of mounting debt and shrinking equity has curbed their consumers' free-spending ways. The following excerpt is from a New Statesman article by Liam Halligan:

Britain's personal debt burden recently topped 1 trillion pounds (that's 1 followed by 12 zeros), and, while the bulk of that is morgages, more than a fifth is unsecured debt -- on credit cards and personal loans.(...) Consumer bankruptcies have hit record levels. New official figures show individual insolvencies up 37 per cent on 2004...Millions of households have sunk into debt on the expectation that property prices will keep rising. But prices have fallen for 14 months in a row. The danger is that, as our economy slows and unemployment rises, mortgage defaults will go up. House prices could then fall more rapidly, possibly sparking an early-1990s style crash...Middle England's debt burden is likely to drain household incomes, acting as a drag-anchor on our economy for many years to come. As the realisation sinks in, British consumers -- up to their necks in debt -- are opting to consume much less. By doing so, they areseriously undermining the single most important factor driving the growth of the British economy. And that affects us all, indebted or not.
"I look at people on the high street," says Sam Drew, "and wonder how many others are in too deep. There are millions out there like me. We've become so used to living beyond our means we're now in a debt pandemic."