The UK’s economic growth is built on debt masked by a housing boom that creates a false sense of wealth and encourages people to overspend by drawing cash from their homes, a new report claims. More mirage than miracle, published by the centre right thinktank Policy Exchange, states that from 2001 to 2006, a total of £256 billion in equity was extracted from UK property values. “Dependent as it is on rising house prices, housing equity withdrawal cannot continue to prop up our consumer spending at this level,”the report warned. <br><br>People’s changing attitude to debt has, according to the report, caused the UK savings rate to plummet from 8.3% of income 15 years ago to around zero. Personal debt has upped by 137% to £1,343 billion since June 1993. The report was written by German economists Holger Schmieding, chief Europe economist for Bank of America, and Policy Exchange’s chief economist Dr Oliver Hartwich. Dr Hartwich said: “The rest of Europe has been cutting taxes and pushing through reforms, and what has Britain done? The economy has in effect been ‘bailed out’by housing inflation and debt.” The International Monetary Fund (IMF) has meanwhile warned that the UK could be heading for …