on many fronts. putting the real economy truly center - stage means that we should build such europe that opens up opportunities to innovate and create new businesses and thus jobs. better institutions to prevent and manage crises, including stabilization policies, are no substitute for structural reforms that are needed to improve europe ’ s productivity and real competitiveness. finally, let ’ s recall that eurozone reform is closely linked to the overall future of europe and its union. the values of the enlightenment, which underpin the european social and political model, are now challenged both politically and socially, both from the inside and the outside. in this context the eurozone reform is an essential element of a broader endeavor to strengthen europe. as europeans, we should recognize the urgency of this effort, especially now as europe ’ s duty as a standard - bearer for liberal democracy and multilateral international order has become even more critical than it was still some years ago. 2 / 2 bis central bankers'speeches

has fallen back significantly since 2012 and is now back to levels seen in the 1990s. the share of households with moderately high mortgage debt to income ratios ( between 3 and 5 ) has also fallen. the proportion of households with debt - service ratios between 30 % and 40 % is now much smaller than it was in 2008. bis central bankers ’ speeches of their capital, funding and liquidity positions. but risky uk mortgage assets, along with uk commercial property, certainly damaged a number of uk institutions. one risk from an increase in household balance sheets due to house purchases being financed by ever increasing amounts of debt is that homeowners can ’ t repay the mortgage in times of stress. we saw this in the uk in the 1990s. but the main damage in the last crisis from high levels of uk households ’ secured debt however did not come so much through bank losses or through the huge falls in house prices seen in other countries. cushioned by the cuts in interest rates to effectively zero, qe, and stronger - than - expected employment levels12, uk households were largely able to maintain servicing their debt even though their real income was declining. indeed they paid debt down to reduce the size of their balance sheets. but to do so, they cut back their consumption markedly, thus deepening and prolonging the recession. real household consumption fell by 6 % between end 2007 and 2009. this is an important if less well known risk from large household balance sheets. even if they pay their mortgages households cut back consumption when house prices fall and uncertainty about future income increases. this was especially true in the last recession for the more highly indebted households who cut spending substantially than did less indebted households. that is, the distribution of debt also matters. similar effects were seen in other countries. and there is considerable evidence that recessions that follow debt financed housing booms are worse. the imf estimate that for each additional 10 percentage point rise in household debt prior to the global financial crisis, the consumption loss ( as a percent of pre - crisis trend ) was larger by 2. 6 percentage points. other studies have come to similar conclusions. 13 conclusion since the 1980s the uk has seen a sharp and very material increase in the credit to gdp ratio and in the stock of household debt relative to income. this was particularly pronounced in the 10 year upswing of the last financial cycle when credit grew over twice as fast as gdp. this surge in credit did not finance an economic boom. indeed,