I’m looking forward to reading the Spectator cover story on the “unexploded subprime timebomb”, which has been trailed on the Coffee House blog. The full political impact of indebtedness is still unclear, although its importance is sinking in across Westminster. The data on which the Spectator piece is based will add some much needed clarity to the debate — in Fraser Nelson’s words: “if you want to know where the unexploded sub-prime bombs are planted in Britain, this is the list you need”.
But we should be careful, because I’m not sure figures tell us what we really want to know. The breakdown of “subprime exposure” provided by Experian is not a based on the number of subprime borrowers, but rather the potential size of the subprime market for lenders. Basically, it shows the number of people in jobs who have patchy credit rating. This means it includes people who have not borrowed. And it includes people who took a mortgage two years ago to buy a house that may have since doubled in value. It reminds me of the cable tv channels that claim they have a potential audience of 500m, but don’t tell you how many people watch the channel.