Debt Reaches Record Levels in the UK
September 14th, 2007 | by admin |The total amount of debt owed by the British is not a collective £3,345bn. This is more than the country’s gross domestic product and is the highest on record.
The debt levels have been increasing because of:
- Relaxed lending criteria, especially in the adverse credit market
- Low medium term interest rates. - A period of low inflation has enable UK interest rates to be low for a long time. In 2003 interest rates fell to 3.5%, encouraging consumers to take on more debt.
- Changes in social attitudes to debt. Debt is becoming more a factor of life and people are increasingly expecting to have to borrow. A good example is student loans and student debt.
- Long period of economic growth and the consequent increase in consumer spending.
The Citizens Advice Bureau have said that the number of problem debt cases have jumped by 20 per cent since this time last year. The British Retail Consortium have stated that this could be a difficult year for UK retailing.
Why Debt is becoming more of a problem
- Interest rates have been increased 5 times to 5.75%
- There is a global credit crunch as a result of the sub prime meltdown. Just recently the Bank of England had to intervene and lend money to the Northern Rock building society. link
- Slowdown in house price growth