Equally, we did not see the kind of asset-price bubbles or the build-up of other financial vulnerabilities which typically precede a recession, as the unwinding of such imbalances generally results in lower private-sector appetite for borrowing, tighter lending standards by banks, and a rise in precautionary savings by households.
In recent years, in part thanks to the generally accommodative stance of monetary policy, banks’ non-performing loans have declined, the number of home repossessions has equally fallen to low levels, and while equity prices have performed strongly, home prices have broadly stagnated in real terms.