Top story: Why personal debt could bring down economy

Good morning – Warren Murray here with your Tuesday briefing.

Britain’s rising level of personal debt has prompted a warning from the Bank of England about dire consequences for lenders and the economy. There are “classic signs” that the risks involved in car finance, credit cards and personal loans are being underestimated as financial institutions make hay while the sun shines, says Alex Brazier, the Bank’s director for financial stability.

The economy defied expectations when it grew strongly in the six months after the EU referendum. But that was partly fuelled by consumers racking up their credit cards and loans, as lenders offered easier terms and longer interest-free deals. Much higher levels of borrowing compared with income are now being allowed, at a time when household incomes have only marginally risen.



As the anniversary of the global financial meltdown approaches, Brazier has suggested current low rates of default on personal credit may have again caused banks to become blinkered to the potential for disaster. Back in 2007, “banks – and their regulators – were blind to the basic fact that more debt meant greater risk of loss”.

“Lenders have not entered, but they may be dicing with, the spiral of complacency. The spiral continues, and borrowers rack up more and more debt.



“[In 2007] complacency gave way to crisis. Companies and households were unable to refinance their debts. The result was economic disaster.”



Al-Aqsa backdown – In the past few hours Israel has announced it is removing metal detectors from the al-Aqsa mosque compound in Jerusalem after their installation sparked days of deadly violence. Our correspondent there, Peter Beaumont, has reported overnight that the release of an Israeli embassy guard by Jordanian officials appears to have been key to the deal. Israel brought in detectors at the site – holy to both Jews and Muslims – after gunmen smuggled in weapons and shot two Israeli policemen. The Israeli prime minister’s office said last night that the detectors would be replaced by other security measures.

‘Sleep tight our beautiful boy’ – With those words Connie Yates and Chris Gard have called an end to their long-running fight for experimental medical treatment for their infant son, Charlie. In emotional scenes at the high court, the family said scans had shown it was too late for the therapy known as NBT to succeed.

The parents said: “Mummy and Daddy love you so much Charlie, we always have and we always will and we are so sorry that we couldn’t save you but we weren’t allowed to.” Great Ormond Street children’s hospital has attacked the US neurology professor Michio Hirano for giving the parents false hope. Charlie, born on 4 August last year with a rare genetic disorder, is now expected to be taken off life support.

Leasehold victory – The government will abolish the sale of new-build houses on leasehold terms in England while restricting ground rents on flats to a “peppercorn” level. Exploitative contracts have seen some buyers lumped with ground rents that double every 10 years, leaving them facing tens of thousand of pounds in costs and rendering their homes unsaleable. After a Guardian Money investigation, the communities secretary, Sajid Javid, is to announce a crackdown. But campaigners say relief is also needed for existing homeowners caught in the “absolute racket” of leasehold housing.

Macron’s Libya summit – The French president, Emmanuel Macron, is attempting to broker peace in Libya with a meeting in Europe today of leaders from rival groups. Control of much of Libya in the post-Gaddafi era is roughly split between the UN-backed National Accord government in Tripoli and the so-called Libyan National Army of warlord Khalifa Haftar in the east. Stabilising Libya is key to ending the flow of refugees via the Mediterranean to Italy and the EU. Macron has said France’s involvement in toppling Gaddafi in 2011 was a mistake and has committed himself to efforts to restore order in the country.

Wheel clamps replace tax discs – There has been a surge in cars clamped for unpaid vehicle duties since the government abolished tax discs, Guardian inquiries have revealed. The 166% increase has been condemned as a DVLA revenue-raising exercise with drivers charged up to £800 for failing pay their vehicle excise duty. The AA says tax discs were an important reminder for owners to pay their fees. Vehicle excise duty also no longer follows a vehicle when it is privately sold, leading to more confusion and fines. The DVLA, however, says it is “easier than ever to tax your vehicle”.

Dib dib Donald – The US election landed the Boy Scouts of America with Donald Trump as their traditional honorary president – and on Monday, at their annual jamboree, he gave them a speech to remember, for dubious reasons. Trump was supposed to talk about the merits of scouting, but the president rambled off-script with remarks that veered from the predictably nakedly partisan – about Barack Obama, healthcare, “fake news” and the “fake media” – to the rather creepy, when he alluded, in front of the crowd of children, to adult happenings on board a rich man’s yacht: “You’re Boy Scouts, I’m not going to tell you what he did – should I tell you?” Pray for their sake that he didn’t show up at the campfire singalong with further anecdotes.

Lunchtime read: The sex slaves of Isis

Accounts of the Islamic State group’s treatment of Yazidi women as sex slaves make for harrowing but essential reading. Thousands were captured as their fathers, brothers and sons were massacred when Isis overran Sinjar in Iraq. The women and girls were often imprisoned en masse in filthy conditions, then bought and sold across Iraq and Syria – sometimes by former friends – in a system of institutionalised servitude and rape, all rationalised by a warping of religious doctrine.

A displaced Iraqi woman from the Yazidi community poses for a picture in the northern Iraqi town of Dohuk in May 2015. Photograph: Safin Hamed/AFP/Getty Images

As the war against Isis continues to win back territory, smugglers are working to rescue the Yazidi women – buying them from Isis fighters, or from the slave markets or online auctions. The ancient Yazidi culture is resilient but the toll on the women and their communities has been severe, writes Cathy Otten.

Sport

The lives of England’s World Cup-winning team and future generations of female cricketers will be transformed by the victory, according to leading agents and sport marketing experts. Meanwhile, one of the heroes of the final, Anya Shrubsole, was so focused during the match she is finding it “quite hard to remember everything that happened”.

The president of amateur boxing’s governing body, Aiba, is set to be ousted from his position with instability and financial turmoil growing at the organisation. The Olympic swimming champion Adam Peaty claimed an expected title before proving the inspiration for his Great Britain team-mate Ben Proud to secure a surprise gold medal at the world championships in Budapest on Monday night.

And, with not a single Scottish manager in charge of one of the Premier League clubs this coming season for the first time since England’s top division rebranded, Ewan Murray asks, why has their star fallen?



Business

Asian indexes have been mixed today with Japan’s Nikkei slightly down and Hong Kong’s Hang Seng slightly higher. Overnight the pound was buying US$1.30 and €1.12.

The papers

Most front pages are dominated by pictures of Charlie Gard and news that his parents are ending their court battle for treatment in the United States. The Mirror takes up most of its front with the headline “Time’s run out for our brave warrior” and calls it the “Tragedy of Charlie Gard”.

Guardian front page, 25 July 2017. Photograph: The Guardian

The Mail uses a picture of Charlie with his eyes open – the copy later explains it was taken before he fell ill. “Sleep tight our beautiful little boy” says the headline. The Sun has a picture of Charlie with his mother, Connie Yates, and the headline “We’re so sorry we couldn’t save you Charlie.”

The Times leads on news that the government is going to end the “scandal” of selling houses with leases that leave owners having to pay large sums in ground rent. The Guardian splashes with news that the Bank of England is warning banks, credit card companies and car loan firms they face action if they engage in reckless lending. The Telegraph’s headline is “Home gadgets open to hackers” – a senior police chief is warning that an internet fridge (and other devices) can leave your bank details vulnerable to theft.

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• This article was amended on 25 July 2017 because an earlier version referred to road tax, when vehicle excise duty was meant.