KEY POINTS:
The spectre of negative equity on a scale not seen since the housing crash of the early 1990s is about to haunt Britain again.
According to Standard & Poor's credit agency, some 1.7 million homeowners will see the value of their home fall below the outstanding balance on their mortgage in the next year.
The gloomiest prediction circulating in London's financial district would see that number ballooning to 3.7 million households - almost one in three.
Meanwhile, consumer confidence has fallen to lows last seen during the slump of the 1970s. Then, as now, consumers faced steep rises in energy prices.
Many economists say inflation will top 5 per cent in the northern autumn.
Stagflation - stagnating growth with high inflation - looks set to join negative equity in spooking the British economy out of its wits.
The scale of negative equity is a result of the sometimes reckless mortgages offered by banks and building societies at the peak of the boom and a predicted further fall in average house prices of 17 per cent by the end of next year.
- INDEPENDENT
