UK consumer debt has outstripped GDP for the first time, with the total
amount outstanding running at £1,345bn compared with £1,330bn in GDP.
The figures, from a Grant Thornton survey, reveal the ease with which the
public has been able to borrow, and would have left the country technically
bankrupt if it were not for much of the debt being repayable over several years.
‘Britain’s huge level of consumer debt is symptomatic of the country’s well
established “buy now pay later” culture,’ said Stephen Gifford, Grant Thornton’s
chief economist. ‘We can no longer generate enough yearly GDP to cover the
amount we owe and need next year’s income to cover this year’s debts.’
Grant Thornton head of IVAs Mark Allen said many people walked a ‘financial
tightrope’ and were in danger of defaulting on their repayments.
‘All it takes is an increase in costs, or, as is the present case, a rise in
mortgage premiums due to higher interest rates, to force people to default on
their repayments – hence the increases in bankruptcies and IVAs,’ said Allen.
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