Personal Debt Exceeds Britain's Gdp

Friday, 22 August, 2008

Personal debt in the UK is higher than the income generated by the country as a whole for the second year running.

The total amount owed by consumers through mortgages, loans and credit cards rose by 7.3 per cent during the year to the end of June to stand at £1.444 trillion, according to accountants Grant Thornton.

"The figures clearly illustrate the continuing problem of growing personal debt levels in the UK" - Stephen Gifford

But during the same period gross domestic product (GDP) rose by only 5.1 per cent in nominal terms to £1.41 trillion.

As a result it would take until January 8, 2009, to pay off the UK's outstanding consumer debt from GDP during a calendar year.

The date at which GDP can cover consumer debt has been getting later and later during the past decade.

The group said the figures showed that despite tighter lending criteria and a reduced availability of debt as a result of the credit crunch, the UK was continuing to suffer from the legacy of cheap borrowing over the past few years.

Stephen Gifford, Grant Thornton's chief economist, said: "Despite the global downturn flattening the growth of personal debt and UK GDP over the past few quarters, debt levels continue to grow at a faster rate than the income the UK generates.

"If the property market and economy continue to weaken, the current levels of personal debt will become unsustainable and there will be a marked increase in personal insolvencies."

Source: http://itn.co.uk/