living standards are going down because of a power shift from labour to capital

Imagine. You’re in a tunnel and it’s dark, then you hear a thunderous noise and see an approaching light. Wouldn’t the sensible thing to do be to accept that an oncoming train is happening and prepare for it? Hit the deck and you might survive it.

When it comes to falling average wages in the West, however, the approach seems to be to ignore what is happening and yell out “living standards are going down! It’s unfair! How can we stop this!”. It’s a vote-winner maybe, but it isn’t effective. From an individual point of view – the response should be to try and get ahead of the curve. Consume less – and sign off the treadmill of Buying More Stuff Makes You Happy.

This applies particularly to the so-called ‘middle class’ – you are the people that are in the line of fire. If you don’t believe me, look at what Blackrock has shown is happening in the US in a throwaway chart in its 2014 Investment Outlook

Capital is getting more of the pie than labour for years now (source - BlackRock)
Capital is getting more of the pie than labour for years now (source – BlackRock)

What happened after 2000, then? The Happy Investors title is questionable, after haven’t we heard often enough that the stock market has been trading sideways ever since the dotcom bust

S&P500 - log Y axis
S&P500 – log Y axis

Well, it seems to have broken out of that now, and of course what isn’t shown on the chart is the dividend income. So what did happen after 2000 then?

I would hazard a guess at improved communications from the Internet, improved data processing, and the arrival of a shed-load of keen young workers from what used to be called the third world. Although it’s been fashionable for the likes of the Resolution Foundation to pretend that government action can push back on this:

The US experience also shows us that the fate of everyday workers in America is a product of economic and social policy choices, rather than the inevitable result of globalization, technological change and immigration.

In other words, we too have a choice: it is possible to reverse the trends in living standards that are beginning to emerge here in the UK.

I don’t think they’re right at all. For sure, government action may be able to ameliorate the effects of this via redistribution, but only up to a point. These improved communications and technology means that capital can flee taxation and regulation. Capital, labour and land/mineral resources are the factors of production, and it makes sense for capital to move towards where labour is cheaper.

Others blame the damn baby boomers for it all, and the yell goes up that it’s all so unfair, Living standards are going down. I would actually challenge that statement -I think living standards are going up for humanity as a whole.

Although not strictly about wealth, Hans Rosling’s time series shows improved living standards across the world in a pretty fundamental way. Seeing a lower proportion of of your kids die before 5 has got to be a step up in living standards!

It’s part of why people don’t talk about the Third World any more. It wasn’t aid that helped them up – it was trade. That trade made our goods a lot cheaper and a lot more varied in the 2000s, but it also brought a hell of a lot of competition into the workplace. And while living standards for humanity as a whole are going up, the backdraft of that means that wages will fall in the West relative to what they were for any typical skill level, until they roughly equalise globally. Robert Peston had a program on Europe and Niall Ferguson on China – both of them called out some inconvenient truths about competition and living standards in the West. President Obama called it out in two years ago in a State of the Union address.

“Many people watching tonight can probably remember a time when finding a good job meant showing up at a nearby factory or a business downtown. You didn’t always need a degree, and your competition was pretty much limited to your neighbours. If you worked hard, chances are you’d have a job for life, with a decent paycheck, good benefits, and the occasional promotion. Maybe you’d even have the pride of seeing your kids work at the same company. That world has changed. And for many, the change has been painful.”

That’s what globalisation does – it means you can buy a DVD player for £18 in Tesco [ref]That still sounds awesome to me because I remember buying my first VCR secondhand ex-rental for £150 – about £400 in today’s money[/ref]. But the downside of that is your kids will struggle to get a job if they are of average ability, so all of a sudden cheap doesn’t look so cheap, really.

Your wages will fall, compared to what you’re used to, if you have a middle class job.

You will have less than your parents, if they were doing the same sort of job. They were competing against the rest of the West, you will be competing with half the world. Your gadgets will be far better and varied, and cheaper than theirs were. You will be healthier and live longer. But they had a more stable work environment, their employers were better because they had less choice. You will find it much easier, arguably too easy, to borrow money. Just because you can doesn’t mean you should.

Maybe Baby? Maybe not

You will find it much dearer to have children than your parents, because  consumer society is now set anticipating dual income households. The opportunity cost of children is more that it was for your parents. Having it all was never an option, though perhaps your grandchildren may get it if resource crunches or global warming don’t get humanity first. [ref]If Hans Rosling is right, there may one day become a day when the fertility rate has fallen so low that governments may actively promote new citizens for economic reasons, and then you may have it all. At the moment it is far easier and cheaper to import them, and the world is not short of humans at the moment.[/ref]

So for God’s sake do some forward planning. Think about the big things in life – who/if you marry/partner with. Think about where you are going to work, and live. Think about whether you can afford to have children before you have them. You are unlikely to be able to afford to have as many as your parents did, and if you do, your disposable income will be squeezed more than theirs was, all other things being equal.

You cna own your house. You can have four chidlren. What you can't do, Shona, is do both, not on your money.
You can own your house. You can have four children. What you can’t do, Shona, is both, not on your money.

Think about how much house you buy, and remember that a bigger house needs more maintenance, heating and furnishing than a smaller one. That also impacts the children decision – having children is a responsibility, not a right. Consider Shona Sibary as a cautionary tale  – far too many children for her means is the fundamental problem there, though it’s compounded by a lack of strategic planning and general economic muppetry.

Having children is a emotive subject, and there are some physical constraints. However, unlike some former generations, it is a choice nowadays. There has been a lot of focus on relative child poverty in the last administration, but one of the best ways of reducing child poverty is for people to have fewer children if resources are limited. Hans Rosling’s video shows that for what we may think of as poor countries, but Britain is becoming a poorer country for most people. The logic still applies even if the results of the poverty aren’t so stark. You incur a debt to the child as soon as you bring it into the word – the debt of nurturing and love – it isn’t simply a means of self-actualisation in creating a mini-me. It’s a responsibility, not a right that others have to help you with, despite what some people seem to think

The UK housing nightmare

Housing is a particular pathology in the UK, for several reasons. Thatcher’s sale of council housing to buy votes destabilised an effective system of social housing for those who couldn’t afford to buy, and the damage this did to the housing market, together with the rotten terms of the assured shorthold tenancies that prevail in UK renting gives owner-occupation a particularly privileged position. Owner occupation is a crap deal for tenancy for the owner, with huge fixed costs (moving, estate agent’s fees, Stamp Duty in some cases, redecoration/furnishing) and the risk of frozen capital if you have to move to chase work – all of which are more likely now as jobs are less secure and more mobile now than in Thatcher’s time. However, although it’s a crap deal, it’s a lot less crap than strings of assured threshold tenancies (AST) which is the alternative. Which is why people aspire to own rather than rent in the UK despite ownership being a very bad fit for modern working patterns.

There don’t seem to be any good answers here. Other European countries seem to have made renting a lot more attractive, and people are happy in accommodation that is often a lot denser in cities. The British preference for  houses rather than flats means housing is much dearer, and distances to amenities end up longer. This seems to be where the crunch is happening at the moment with living standards – we simply tie far too much of our earnings up in bricks and mortar. If you buy a house at a 4-5 times income multiple, that will consume about 8 times your gross salary [ref]at typical UK long-term interest rates of 4-6% you pay roughly double for your house over 25 years[/ref]. You pay out about a third of your gross salary in tax, so you are agreeing to pour your entire earnings for about 10 years into that house. The situation is improved by inflation (you want lots, as long as your earnings track, which they aren’t likely to nowadays), and many people get some career progression. The arithmetic is ugly, and rents follow the cost of housing by substitution since everyone needs to live somewhere.

Live intentionally – to live well

The global  competition isn’t going away any time real soon, and that means the value of Western middle class labour is going to fall because it’s no longer the only game in town. This is a long-term secular trend, it isn’t particularly about the credit crunch or this particular financial crisis, but the crisis throws a harsh light on it – in the UK the welfare system was used to soften the blow, but that’s likely to be scaled back more and more. These trends will adversely affect the lower end and the middle, they will probably favour the top 10%. That means that essentials like housing, energy and food will cost more than they used to, relatively speaking, because more people with the means to pay will be competing for it globally.

Gadgets and consumer frippery will probably cost less, because there will be more production and a far larger supply of skilled workers in the design and production side, as well as automation removing the need for medium-skilled workers, reducing costs. Looking more widely, the time will come in 5-20 years when a lot of the NHS will be so financially constrained that you will want to have options to go private for some elective treatments.  About £6,000 will get you most elective treatments. It isn’t a bad deal when you look at the fear and loathing that is the US system, but you will probably want to save towards that. Where the NHS scores is in acute and in chronic treatments, but I’m not banking on relying on it for elective medical intervention. It should be noted that saving to a medical emergency fund is not the only way of investing in health. As an early retiree who owns their own time, I choose to walk to places far more than when I was working. Keeping the machinery running is an indirect investment in health, and best of all it is free. Better than free, indeed – as it saves the bus fare/fuel for driving.

Much of the unhappiness about living standards is from unfulfilled expectations – if you are aware of the trends and accept the results of your actions, you will have less of the pain, because you are living intentionally. Whereas if it comes as a surprise to you because you feel you are fundamentally entitled to a steady increase, then you will feel sore and angry. One of the enduring myths of the West was that things always got better.

It’s not even true in living memory, it’s just been a while since the exceptions. Real incomes have fallen in the periods 1974-1977 and 1979-1982 [ref]IFS[/ref]. Britain will still be a rich country even if living standards fall to the levels of the 1990s. Many Britons had a good time then. It really wasn’t so terrible. So if we plan for that, and suddenly some magic happens and the economy takes off and median wages get dragged up, well, we get to have more parties. Whereas if expectations are set to more parties and we end up with 1990s living standards a lot of people will be pissed off. It just seems wise to set expectations lower. Buy less crap, and avoid building too many fixed costs into your life  –

the key to financial success is never taking financial responsibility for anything that eats

Jonathan Pond

As consumers, we are part of the problem

How did the world end up in such a screwed up state? Well, as consumers, we are also part of the problem, because capitalism is values-blind. I went to town to get some replacement bulbs for some Christmas lights, and watched in amazement at people spending shitloads of money on crap. Mainly cheap crap – in 99p and pound shops, this was stuff that should never have been made, never mind shipped here and sold. I eventually bought a replacement set of lights for £2.50, because they deliberately change the lamp bases so spares are only available for a couple of years. There’s no good reason for that, it is designed obsolescence. [ref]You can, however, retain the old bases and pick out the lamps, so I made sure to match the voltage and power, so I will scavenge the old set for lamps to insert into the plastic bases of the new set as the bulbs fail. The price of replacement bulbs is usurous – you get three for £1 or 20 for £2.50 – in a new set ;)[/ref]

We are part of the problem, because we want our stuff cheap. And getting stuff cheap means we buy from Amazon, supporting shit working conditions. We buy £2 chickens from Tesco, supporting shit animal welfare, and buying a load of overpriced water too. I saw a woman buy 20 boxes of Thornton’s chocolates in Wilkinson because they told her it was half-price, and £3, not £6. What they didn’t tell her was that these were non-standard boxes and the weight was lower 😉 She was rewarding deceptive marketing practices.

We fall for cynical marketing – an Apple iPhone is deliberately designed not to last a long time and have non-user replaceable parts, because you are renting an experience from Apple, with the rent levied on the capital cost of the gadget[ref]You may explicitly rent the device capital cost subsidized as part of a mobile phone contract[/ref] – the rental period is defined by the average service life. Even if you look after it, as the operating system moves on, older hardware becomes unsupported, and since you use apps rather than open standards an unsupported device becomes unusable, and destined for landfill even if it works correctly as originally designed. Contrast this with a preamplifier I purchased when I started my first job 31 years ago for £1500, the equivalent of £4000 in today’s money. Financially it was a damn fool thing to have done at that point, though at least I bought it on interest-free credit and paid on time. It is still in service.

The whole way we make electronics anything now is focused on new manufacture, planned obsolescence and no expectation of repair. I repaired a Maplin 150W inverter recently – it cost me a fiver to change two power transistors and a driver transistor. I could buy a new one for £20 – I repaired the old one because I just didn’t want to keep on adding needlessly to the mountains of e-waste when I could do otherwise. That worked for me because I had the skills – for most people this would be beyond economical repair once past the guarantee period.

If we wonder why many jobs are so shit now compared to what they were, occasionally we have to be prepared to charge the face in the mirror. Capital cares only about the bottom line, and it is gaining power, because whenever somebody presents us with a bill for protecting labour, we don’t want to pay the levy. So it goes away and does what we tell it to do – cut costs – do whatever it takes. At the moment capitalism is probably serving humanity okay from a global perspective as it lifts billions out of poverty. It’s not serving many people in the UK that well, because of this, which I’ve swiped from the Resolution Foundation

Median wages are tracing down, and that's what most people feel (from the Resolution Foundaton)
Median wages are tracking down as a share of GDP, and that’s what most people feel (from the Resolution Foundation)

Although I agree with their narrative, I don’t agree with their solution. In the end the fundamental problem is that middle-ability jobs are being leached from the economy. You can’t legislate for more GDP going to labour, because what will happen is that capital will scarper to places where it can produce GDP without being taxed for redistribution. Of course, we could renationalise the energy industry, which is where Ed Miliband is probably going in the end. In which case the question will change to “how would Sir like to pay for the increasing cost of energy? Higher bills or higher taxes, bit of both? It’s your call.”

You can run, but you can’t hide…

That global competition is coming your way. You can deal with is several ways. You can upskill, if you are bright enough, which will bring more in. You can hop from one leg to another and make a low keening noise that it isn’t fair, which won’t help your situation but will make you feel better for a while. You can downshift or not take on as many commitments – in the form of smaller housing, fewer children, fewer consumer purchases and knick-knacks or do what Jacob from ERE does. Or you can stick your fingers in your ears and go “la-lal-la-la-la”. Only two of those responses will help you avoid getting flattened by the oncoming train of falling average wages…

Of course, one of the ways of avoiding this is to add income from capital to the mix. But the rub here is that you need about 20 times your annual income from capital as a capital stake, and it isn’t easy to save that much up over a 40-year working life while being a good little consumer and buying crap all the time. However, if you are prepared to live differently and dramatically below your means you can make this work for you – it is part of the RITERE and MMM way. These guys will be better insulated from falling wages – because their income is coming from capital as time goes by, rather than labour, and the 21st seems to be the Century of Capital where the 20th was the Century of Labour – in the West at least.



21 thoughts on “living standards are going down because of a power shift from labour to capital”

  1. Ermine, thank you for a thought provoking piece on this dreary Thursday morning, it helped me clarify a few thoughts that have been bouncing around my head of late.

    I grew up in a family of 5 children and you are spot on – we won’t have as many children as we just can’t afford it. Of the 5 (aged 22-33), there are currently 2 grandchildren. Contrast that with my mother, who had 3 children of her own by age 25.

    In real terms, this is having an obvious effect. All of my siblings have a much higher quality of life than my parents enjoyed until the later stages of their careers, with most of them on the housing ladder, with a car of some sort and occasional holidays (and health).

    As regards housing (and employment), the odds do not look as positive, but (almost) everyone seems to be adapting well to the fact that our employment choices are not as attractive.

    Some of my siblings are rampant over-achievers, promoted within a year or two of starting work, I have managed to keep our money under control with mortgage overpayments, saving and thriftiness and my youngest sibling has a great social network and regularly picks up additional freelance jobs.

    I think the common factor here is a willingness to adapt and that’s what gives me hope for the future.

    Interestingly enough, the only sibling who’s doing less well is the one most rooted in the past (i.e. blame, expectations of a ‘forever job’, inability to control spending and assumptions that things will be the same for them as it was for our parents).

    Excuse my ramble, you have got me thinking.


  2. A nice recap of what we’re facing due to globalisation, but I have to disagree with some of your views on children.

    How can we organise a civilised society in which it’s ok to tell middle class people that they’re too poor to reproduce? I agree that having children is an enormous responsibility but surely it’s also a right on some basic human level?

    If the ermines end up not having any kids then Shona having 4 children is going to keep the overall population stable, isn’t it?

    And looking back on your other article about this, her problem seemed to be using her oversized house as an ATM and trying to send all her kids to private schools rather than simply having 4 children.

    I’d argue it’s perfectly possible to pay for 2 or perhaps more children on the median UK income if you’re sensible about what you spend your money on. In fact there’s an economy of scale with each extra kid due to hand-me-downs, shared bedrooms, batch cooking, etc.

    At the moment we’re subsidising the poorest families with council houses and benefits but discouraging the middle classes by taking away child benefit and reducing the tax breaks for nursery fees for example. In China they do the opposite. And then we wonder why our educational results are so much worse!


  3. @L Sorry to hear of the dreary morning – at least the weekend is close!!!

    As far as the world of work is concerned, what I see in the (more dynamic) young is a greater willingness to take on change – ’twas ever thus – and a much greater willingness to move, abroad if necessary, and to run multiple income streams. All of these improve resilience.

    @BTS I seem to have hit a nerve there! FWIW I have lived the principle – twice in my life I asked myself this question. I didn’t factor in Government largesse, because I didn’t expect that to continue.

    having children […] but surely it’s also a right on some basic human level?

    I’m not sure – it isn’t an individual and inalienable right. Where mustering the resources to do something demands the input of your fellow-people, they need convincing, because they have rights too. Human societies do a lot of this negotiation, but it is still a negotiation at a social/political level.

    And in the case of Britain, we seem to be going down a track where the middle class wants to have more stuff, they will be increasingly squeezed from globalisation and a byproduct of that is that there’s less to go on middle class children. Overall, Britain is doing okay on reproduction – it just isn’t the middle class doing it – and not particularly the poor, either…

    I’m merely observing – I don’t think I’ve been part of the policy decisions as far as other people are generally concerned 😉 I don’t have a problem with Shona having four children. But she used her house as an ATM partly because her ambition for them exceeded her resource base. That strikes me as unwise, and surely some of the hallmarks of being middle class is you have values, take personal responsibility and look before you leap? Obviously things change, mistakes do happen and ghastly events happen, but thankfully Shona didn’t take any hits from the big ones – Redundancy, Death, Divorce, Disease. Her lifestyle was too big for her budget. With two kids a standard 3-bed family home would have been okay, but no, she needs a 4-bed house…
    The ‘middle class’ look down on the poor for the way they have kids, but perhaps they need to put their own house in order too. The signs of falling UK living standards are persistent, they’re reasonably clear and they’re worth taking heed of, since a child is a 20-year financial commitment as well as a marvellous bundle of joy 😉


  4. I would completely disagree with the statement that the state is powerless

    Without state handouts many of the biggest companies in the FTSE100 would be minnows (e.g. Serco, Capita, BAE, RBS, Lloyds)

    Simply the resources of the UK state are woefully misfocused

    The largest chunk of UK government spending is on the NHS and pensioner welfare, sums which by definition aren’t going to make much of a return on investment on

    So much money has been ploughed into the pensioners that they are the richest cohort in the country, for the first time ever

    Sure they vote, but wouldn’t large parts of that money really better be invested in the pre-work and working population who will pay taxes for several decades to come

    At the moment this is all to fall to their lucky by lottery offspring after inheritance tax takes a slice but there are numerous routes available to stop that inherently unfair golden shower (ugh..ugly metaphor)

    The problem with the West is that it is a gerontocracy, with the entrenched elite quite happy with the status quo


  5. Very nicely written argument. I fear you’re correct about the income doom awaiting the middle classes.

    However, this bit might be a little over-played:

    > Thatcher’s sale of council housing to buy votes destabilised an effective system of social housing for those who couldn’t afford to buy, and the damage this did to the housing market …

    Sale of council houses to sitting tenants had less of an impact on social-housing stock availability than one might think, because a council-house tenant, once given the right to rent a property, could stay in it indefinitely, even if his or her income increased subsequentl. In other words, houses with sitting tenants tended to go out of circulation for decades anyway.

    Of course, once the council houses were sold off, they weren’t coming back into the social housing stock, I’m not denying that. Nor am I saying that the state received the right price for the assets sold.

    However, it had less of a short- and mid-term effect on the availability of social-housing stock than one might think, because the houses sold were unlikely to become available for reletting anytime soon.

    As to this being a policy designed to buy votes, that sounds unlikely. Was Thatcher’s “Community Charge” a policy designed to buy votes? Probably not: it was a policy designed to move towards what was the government considered to be a better way of doing things. The same is almost certainly true for the council house sales.

    One sometimes hears criticsm of more recent premiers that they have governed in a way which has been driven by focus groups, and over-weening “electorate management”.

    Those critics often call for a return to real ideological politics. That, presumably, comes closer to Thatcher’s radical reforms of both social housing and local taxation: one might not agree politically with them, but calling council house sales, or the poll tax, cynical vote-buying tactics is to miss the point, I think.


  6. @ermine

    Not really hitting a nerve but I’ve read a few of your comments on the subject of children before and never got round to replying until now, so I guess it’s a rant that was waiting to come out!

    When I was in China I stayed overnight with a family whose mother had to catch a bus to the nearest town to have a compulsory abortion because she already had two children (some farming families were allowed a second child under the one child policy, but three was too many).

    I know we are a long way from the policies of communist China but it makes me feel uncomfortable when large families are vilified for wanting larger houses to be available.


  7. @Neverland, I’d be interested to see the ONS on the pensioners being the richest, it would appear to be at variance with the general representation, but maybe they have good PR.

    While it isn’t powerless I can’t see the Government having the firepower to hold against the increase in the global workforce

    @Jonathan it’s a long time ago but I do recall Thatcher’s election, and a little bit of the ghastly state of Britain beforehand. RTB was presented very positively as a way for people to ‘own’ their own homes, making people feel a step apart. I do think it was a vote winner.

    Council housing was much more prevalent than social housing now and much more mixed – half the kids from my school came from families that lived in council houses, and many of their parents had better jobs than mine, what was then called white collar as opposed to blue collar. It’s difficult to imagine middle managers bringing up kids in social housing nowadays.

    Whatever it was that has made housing such a misery in Britain was nowhere near as bad before RTB. Perhaps it was correlation and not causation – the rise of the two-income household happened around the same time.

    @BTS I think we can agree on not wishing to see that! Although I think living standards will fall for a while, I don’t expect them to fall endlessly. Peston’s program contrasted a middle manager in the UK on ~50k with an equivalent in China on 15k, and Chinese wages have risen a little since. So wages may meet around halfway. I’d hope we can avoid Great Leaps and similar outcomes!


  8. Nicely put together argument ermine.

    I’m not completely convinced by the wider ‘inevitable’ narrative. The thing I think is lacking is the debt dimension, will people continue to boost profit with their personal debt? Historically no, but how long this cycle can continue is anyones guess.
    Myself, I find it too easy to think in stereotypes, it’s easy to read a ”Shona” lifestyle and think is this what we have called progress in the last 40 years? New cars, shiny iTracku’s, hand car wash in every carpark all supported by debt. F’kit we don’t need it, bring on a rollback in living standards…
    But I don’t actually see any Shona’s around here, how many are there really? I look at my own lifestyle and those in my community and I don’t see an awful lot of difference to that I grew up with in the 70’s (perhaps less blown washing machines and car engines turning over on a cold morning), there’s not a lot of fat to be trimmed, no bin steam cleaning to forego.
    To turn the real wages clock back further is really heading into the fifties, tin bath in front of a coal fire, bread and dripping, kids sharing a bed, polio and croup.
    Not sure that we’ll all want to go back there against a backdrop of rising inequality.


  9. > The problem with the West is that it is
    > a gerontocracy, with the entrenched elite
    > quite happy with the status quo

    See “Search the Sky” by C. M. Kornbluth & Frederick Pohl. Our young heros have to vote for the new head of government and the slogan is “Oldest is bestest”, so whichever candidate is older is the winner of the election.


  10. See

    on how pensioners have fared relatively better than anyone else over recent years.

    I agree with the main thrust of your points even though, being over 60, I benefit from some of the absurdities of the system.
    You forgot to mention how much pensioners cost the NHS and, my own pet bugbear, the “health hobbyists” of my acquaintance whose main topic of conversation is their illnesses, real and imaginary. Of course, there are many older people who are uncomplaining and have serious health problems and deserve the best treatment that the NHS can provide,but it’s time that some triage was used to manage the “health hobbyists”.
    A more general point about taxation is that material wealth such as property and investments is much more lightly taxed than income. This is yet another way in which the system favours the old over the young and the idle rich over the striving poor.

    However, nothing will change until there is blood on the streets and, for the time being, selfish old gits will still whinge about having to pay any tax whatsoever.


  11. @Nathan I do hope that’s right, and there’s probably a lot of crap spending out there. It’s the housing debt that I think is dangerous. I bought a house at a 5x multiple and a 20% deposit in 1989. And really struggled through the early 1990s. I was lucky enough not to lose my job, but neither did my neighbours. One of them was repossessed and the other downshifted first – but didn’t find it easy to downshift from a two-up two-down.

    Borrowing too much money at low interest rates was what did for Shona. The younger Ermine did at least get the sales droid to tell me what a 14% interest rate would look like in repayments. It was a way of sounding the extreme case – I didn’t expect to be paying that in three years time – the initial mortgage rate was 6.5% ISTR!


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