U.K. vacations becoming much more affordable

The U.K. has some serious debt problems.

British household debt is now 170 percent of overall annual income, compared with 130 percent in the United States. In an echo of the U.S. rush into subprime mortgages with low teaser rates, millions of homeowners in Britain have piled into variable-rate mortgages that are linked to the rock-bottom base rate.

As for the British government, it has been able to finance a budget deficit of 12.5 percent of G.D.P. — equal to Greece’s — at an interest rate more than two full percentage points lower only because the Bank of England bought the majority of the bonds it issued last year.

There’s an upside for us Yanks: The British pound should continue falling in value, making trips “across the pond” much more affordable.

Posted by James on Tuesday, March 02, 2010