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Financialisation, Welfare Retrenchment and Subsistence Debt in Britain

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  • Hulya Dagdeviren
  • Jiayi Balasuriya
  • Sheila Luz
  • Ali Malik
  • Haider Shah

Abstract

This paper investigates the dynamics of low income household (LIH) indebtedness under austerity in Britain. Building on a range of political economy studies on the role of the state in the process of financialisation, the paper discusses the transition in the nature of LIH indebtedness in connection to the recent welfare retrenchment. The analysis of survey data and semi-structured interviews establishes the fact that LIHs experienced the greatest growth in unsecured debt to income ratio under austerity. More importantly, unlike the pre-crisis period when LIHs’ debt reflected a desire ‘to keep-up with the Joneses’, post crisis, a different form of indebtedness has emerged. There has been a notable rise in debt for essential needs such as rent, food and utility services. Liabilities are not only owed to banks and fringe providers (payday lenders, money shops, etc.) but also to non-financial companies and local authorities which have become de facto creditors. The evidence in this paper shows that these changes are directly related to the austerity measures, especially, to the cuts in welfare budgets and the intensified use of ‘disciplinary techniques’ in the form of sanctions and administrative / legal enforcement of debt collection by public sector entities.

Suggested Citation

  • Hulya Dagdeviren & Jiayi Balasuriya & Sheila Luz & Ali Malik & Haider Shah, 2020. "Financialisation, Welfare Retrenchment and Subsistence Debt in Britain," New Political Economy, Taylor & Francis Journals, vol. 25(2), pages 159-173, February.
  • Handle: RePEc:taf:cnpexx:v:25:y:2020:i:2:p:159-173
    DOI: 10.1080/13563467.2019.1570102
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    Cited by:

    1. Hulya Dagdeviren & Jiayi Balasuriya & Christopher Nicholas, 2022. "Spatial dynamics of post-crisis deleveraging [Financial geography II: financial geographies of housing and real estate]," Journal of Economic Geography, Oxford University Press, vol. 22(6), pages 1225-1246.
    2. Jan Libich & Liam Lenten, 2022. "Hero or villain? The financial system in the 21st century," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 3-40, February.
    3. Hulya Dagdeviren & Ewa Karwowski, 2022. "Impasse or mutation? Austerity and (de)financialisation of local governments in Britain [Regul(ariz)ation of fringe credit: Payday lending and the borders of global financial practice]," Journal of Economic Geography, Oxford University Press, vol. 22(3), pages 685-707.
    4. Hiilamo, Aapo, 2020. "Debt matters? Mental wellbeing of older adults with household debt in England," LSE Research Online Documents on Economics 106507, London School of Economics and Political Science, LSE Library.

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