Conditions similar to those in the run-up to financial crisis, says head of business committee

The new head of the business select committee has warned that today’s debt problems are similar to those in the run-up to the 2008 financial crisis.

MP Rachel Reeves, who worked at HBOS during the crisis, told BBC Radio 4 that Brits and regulators must remain “forever vigilant”.

“I do worry about the growth of some of those issues we saw in the mortgage market in 2008 now rearing their heads in unsecured lending and in car purchases,” said Ms Reeves.

“We’ve got to be forever vigilant. We’re not going to have the same crisis as in 2008, but there are risks building up in the financial services sector as well as in household debt.”

Her comments come shortly after the Bank of England reported a sharp rise in household debt and car loans. The Bank said personal loans had increased by 10 per cent over the past year and were now at “dangerous” levels.

Mr Brazier, the Bank’s executive director of financial stability and risk, suggested that further action could be taken to prevent irresponsible lending.

“Household debt – like most things that are good in moderation – can be dangerous in excess. Dangerous to borrowers, lenders and, most importantly from our perspective, everyone else in the economy,” he added.

Recently elected Ms Reeves said she was also keen to look at the events behind the collapse of BHS, as well as employment practices in the gig economy and the gender pay gap.

“I’d like the select committee to scrutinise that, to look at what sectors and businesses are doing well and which have some way to go.

“And I am keen to call in some of those businesses to understand why some – I hope – are getting close to parity on pay, while others are still out of step.”