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Instead, we're going to be asking college students to put more of their income toward interest payments, which will make them less willing to borrow for their education, and will mean that they'll have less money available to spend on everything else.
"While banks appear more willing to lend, borrowers are less willing to borrow," said Paul Dales, an economist at Capital Economics.
Last year's belated OFT report concluded that such a cap would only make life tougher for poor people – and I think we can assume there will always be desperate customers willing to borrow on any black market they can find.
Over the longer term, the rate cut will ripple through the economy, making companies and consumers more willing to borrow for the future and spend their money sooner rather than later.
The two things that are most likely to stop the debt buildup are inflation or falling profits, the former because it will lead to higher interest rates and the latter because it will make bankers more wary of lending and companies less willing to borrow.
"Now people are in a mood that they are not willing to borrow," he explained.
Similar(12)
Now JPMorgan, a leading prime broker, is saying that managers are willing and able to borrow again.
That Vietnam is willing and able to borrow American dollars is a sign of how far the country has come since 1986 in opening its economy.
Their spending has been remarkably stable, not only because drops in employment and income have been less severe than of old, but also because they have been willing and able to borrow.
Despite the deterioration in the public finances, the chancellor is willing if necessary to borrow more money to help strategically important industries and to help lay the foundations for economic recovery.
Recent bank data shows U.K. companies are not willing or able to borrow.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com