Is it Time to Cancel Household Debt?

Contributor(s): Sarah-Jayne Clifton, Professor Deborah James, Dr Johnna Montgomerie, Dr Jerome Roos | Does the COVID-19 crisis mean that the time has now arrived for mass household debt cancellation?

Central among the many social and economic policy challenges arising in our changed world is the pressing need to address high levels of household debt. Despite the lessons of the 2008 Global Financial Crisis, our pre-COVID-19 economic order depended to a dangerous degree on extensive household borrowing – both to maintain household living standards and to fuel growth. The resultant heavy household debt burdens left advanced economies precariously ill-prepared for a shock such as a global pandemic. COVID-19 has put millions out of work and reduced incomes for many more, shattering households’ ability to repay debts and calling time on a cycle of ever-expanding borrowing and debt extension.

A cycle of default spirals through the economy – from consumers and tenants to businesses and landlords, financial institutions and investors. The lifting of lockdown and measures to support firms may mean little if debt-burdened households lack resources to fund living necessities and to spend in reopened businesses. The question arises as to whether individual households, as well as our wider economy and society, can ever recover and rebuild without first escaping from the burden of excessive debt. This event considers these questions and considers how policy might move us beyond a debt-dependent economy in the post-Covid world.

Sarah-Jayne Clifton (@sarahjclifton) is the Director of the Jubilee Debt Campaign, a leading organisation for research in global debt issues, education about their causes and solutions, and campaigning in solidarity with indebted people and countries.

Deborah James (@djameslse) is a Professor of Anthropology at the London School of Economics and Political Science, and a Fellow of the British Academy. She is the author of Money from Nothing: Indebtedness and Aspiration in South Africa and has just completed work on an ESRC-funded project entitled An ethnography of advice: between market, society and the declining welfare state.

Johnna Montgomerie (@j_montgomerie) is Head of the Department of European & International Studies, and Reader in International Political Economy, King’s College London. She is the author of Should We Abolish Household Debts?

Jerome Roos (@JeromeRoos) is an LSE Fellow in International Political Economy at the LSE Department of International Development. He researches the political economy of global finance, sovereign debt, and international crisis management, and is the author of Why Not Default?

Joseph Spooner (@jtspooner) is an Associate Professor in LSE Law and is the author of Bankruptcy: the Case for Relief in an Economy of Debt.

LSE Law (@LSELaw) is one of the world's top law schools with an international reputation for the quality of its teaching and legal research. Our community is one of the largest in the School, and has played a major role in policy debates, policy-making and the education of lawyers and law teachers globally.

This event forms part of LSE’s Shaping the Post-COVID World initiative, convening a series of debates about the direction the world could and should be taking after the crisis, collaboratively producing a roadmap for the future.