Debt There has been much comment on the build up of domestic debt in recent years. In aggregate, the ratio of household debt to disposable income is now over 150%, having risen from around 100% in the late 1990s. This upward trend is not unique to the UK, although the debt-income ratio here is a little higher than in most countries [Chart: 3]. Chart 3: Debt-income ratio across countries France Germany Netherlands Spain US UK Australia  Per Cent  200 180 160 140 120 100 80 60 40 20 0  97  98  99  00  01  02  03  04  05  Source: Data from Eurostat, the Federal Reserve and data sent direct from Reserve Bank of Australia. There are a number of key reasons for the increase, coming from changes both in demand and supply. Supply side factors include: a liberalised financial market place with new categories of lender and greater competition; new technology, in particular the widespread adoption of credit scoring techniques and data sharing that have given confidence to lenders in granting unsecured loans; and greater securitisation, enabling firms to write more business by diversifying and laying off the risk onto third parties without burdening their own balance sheets. On the demand side, there appears to have been a change in social attitudes towards debt that has made people more willing to borrow.
Nevertheless, the increase of aggregate demand will remain below the economy’s potential even during 2014, thus determining the gradual return of inflation to target. At the end of discussions, the Supervisory Council decided to keep the key interest rate unchanged, at 2.50%. 2  BIS central bankers’ speeches