‘Sub-prime’ was recently voted word of the year for 2007 in the US, which clearly demonstrates what dominated the US headlines last year, with many predicting a recession on this side of the Atlantic in 2008. Last year’s slowdown in the US property market exposed financial institutions across the world to billion-pound losses on packaged investments made in mortgages that had been granted to ‘sub-prime’ debtors on low incomes and with poor credit records.
The effects of this on the UK economy have been well documented, causing jitters on the financial markets and an effective freeze on inter-bank lending, leading to the well-publicised problems experienced by Northern Rock – a clear indication that the corporate world ignores personal debt issues at its peril.
