Debt advice queries likely to soar as Brits struggle

30/12/2009

People in the UK appear to be generating more personal debt as the recession continues, new data has shown.

The study by Unbiased.co.uk suggested that there was a £6 billion fall in savings levels across the country in the third quarter of the year compared to the previous three-month period.

Personal debt levels are believed to have declined as a whole during the same period, although this dropped by only £1 billion.

In addition, the report claimed that Britons borrowed 32p for every £1 saved, pushing debt to a 2009 high.

Karen Barrett, chief executive of Unbiased.co.uk, said: "After the dramatic retreat from savings in favour of paying off personal debt in the first half of 2008, consumers are now slipping back into old habits, by borrowing around a third of what they save.

"While our year on year data shows that this is reasonably good for a normal economic cycle, with savings levels currently billions lower than they were back in 2006 and 2007, this is creating a serious barrier to a sustained economic recovery."

Kevin Still, director of EuroDebt, added: "It would appear that many homeowners are using disposable income to reduce secured borrowing, with the Bank of England third quarter estimates showing a reduction of nearly £5 billion.

"This is the sixth successive quarter in which homeowners repaid more of their mortgage than they borrowed against the value of their home. This suggests that many are reducing personal debts rather than saving, where this is viable.

"For those with unmanageable debts there appears to be more credit card borrowing to fund day-to-day expenses, which may result in a debt spiral and an urgent need for professional debt advice."

Tags; Income Worries and Debt,

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